Lord Bernstein of Craigweil

Alexander Bernstein, Esquire, having been created Baron Bernstein of Craigweil, of Craigweil in the County of West Sussex, for life--Was, in his robes, introduced between the Lord Levy and the Lord Puttnam.

Baroness Andrews

Elizabeth Kay Andrews, OBE, having been created Baroness Andrews, of Southover in the County of East Sussex, for life--Was, in her robes, introduced between the Lord Ashley of Stoke and the Lord Dubs.

Elderly Patients: Standards of Care

Lord Morris of Manchester: asked Her Majesty's Government:
	When they expect the National Health Service Executive and the General Medical Council to complete their investigations into Dr Rita Pal's dossier of cases of abuse of elderly patients in National Health Service hospitals overdosed with diamorphine.

Lord Hunt of Kings Heath: My Lords, these allegations necessitate the tracing of patients' notes in order to verify the claims made by Dr Pal. Although this may take some months to complete, I can assure my noble friend that these allegations are being dealt with very seriously.

Lord Morris of Manchester: My Lords, I am grateful to my noble friend. Is he aware that, while they are deeply shocking, Dr Pal's eye-witness accounts of the killing of elderly patients in NHS hospitals by overdosing them with diamorphine, a class-A drug more commonly known as heroin, are not the only, nor even the most easily corroborated, cases of patients being so abused for the stated purpose of easing the bed shortage? When does he expect to see the reports of the two investigations? And can we be assured that, if tough action is called for to bring to account those responsible, then tough action there will be?

Lord Hunt of Kings Heath: My Lords, I wish to make it clear to the House that these are allegations and stand to be investigated by the GMC. I cannot give my noble friend a date for the conclusion of those investigations for the reason mentioned in my first Answer, but I can assure him and the House that the Government are committed to the highest possible standards of care in the NHS for older people. That is why we have established a national service framework, which will report later in the year.

Lord Clement-Jones: My Lords, does the Minister agree that allegations such as these demonstrate the need to have proper statutory protection for older people and that the national service framework, which will be purely voluntary, will be inadequate to protect those older people?

Lord Hunt of Kings Heath: No, my Lords, I do not agree with that. These are allegations. We have to be very cautious before we make statements alleging that these things are happening until the facts have been thoroughly investigated. National service frameworks are an essential component of ensuring high-quality care in the future. We are committed not just to developing national service frameworks but to ensuring that they are published and agreeing that they will be implemented.

Baroness Knight of Collingtree: My Lords, is it not the case that it is not only in National Health Service hospitals that elderly patients are alleged to have been murdered by diamorphine injection? Is it not the case that the police are pursuing a number of allegations of this kind? Do the GMC and the NHS Executive involve themselves with research outside NHS hospitals or is that the responsibility solely of the police?

Lord Hunt of Kings Heath: My Lords, the GMC is concerned with the professional competence of individual doctors. The Department of Health and the NHS Executive are directly concerned with the performance of the National Health Service. If the noble Baroness is referring to care homes, the Care Standards Bill, which has already passed through your Lordships' House, is designed to ensure a high and consistent standard of inspection, including issues to do with the quality of treatment provided in those establishments.

The Lord Bishop of Hereford: My Lords, can the Minister assure the House that, whatever the outcome of these investigations and whatever measures may need to be taken to prevent the abuse of diamorphine in elderly patients, nothing will be done to prejudice or compromise the proper and generous administration of diamorphine in the treatment of terminally ill patients? There is a need to spread the good practices of the hospice movement more widely among the medical profession.

Lord Hunt of Kings Heath: My Lords, the point made by the right reverend Prelate is particularly apposite. Diamorphine is a drug that is legitimately used to treat those who are terminally ill. It is important that we adopt a measured approach to what sometimes can be very scurrilous allegations. In the end, the procedures we are putting in place--in particular as regards the development of the national service framework--will ensure that we achieve a consistent and high quality service for older people. It is important that we await the results of the GMC investigation into this matter before we become too embroiled in allegations which, to be frank, are not proven.

Baroness Gardner of Parkes: My Lords, following on from the intervention of the right reverend Prelate, with which I wholeheartedly agree, can the Minister say whether he will ask the National Institute for Clinical Excellence to look into the recommended dosages, uses and so forth for diamorphine?

Lord Hunt of Kings Heath: My Lords, a long list of investigations has been referred to the National Institute for Clinical Excellence. As regards future referrals, we shall of course keep this under constant review. Full consideration will be given to suggestions such as that just put forward by the noble Baroness.

Lord Ashley of Stoke: My Lords, is my noble friend aware that too many allegations have been made about withdrawal of treatment for this to be left to the GMC? The Government should set up an inquiry into every hospital trust to ensure that all practices in this area are above board. Is he further aware that this particular case arose because the woman doctor concerned was a whistle blower? She was able to blow the whistle only because she was leaving the profession. What message can the Government send to future whistle blowers to reassure them that they will be protected when they feel the need to speak out?

Lord Hunt of Kings Heath: My Lords, I believe that my noble friend knows that firm procedures and guidelines are already in place to enable staff to raise concerns about aspects of patient care. We expect all NHS trusts to ensure that those guidelines and procedures operate effectively. I am of course aware of concerns in this area. However, I believe that the House also needs to be assured that when allegations are made, they are considered as carefully as possible. That is why this matter has been sent to the General Medical Council.
	In general, the Government are committed to high quality care for older people. In terms of safeguards, we have introduced a new system of risk assessment called "controlled assurance" which will match clinical governance to medicines management and ensure that a continuing assessment is set up to monitor prescribing in NHS hospitals. I believe that that is the approach that will produce results as quickly as possible, rather than a system of separate inquiries along the lines mentioned by my noble friend.

Lord McColl of Dulwich: My Lords, does the noble Lord agree that this subject forms part of a general campaign to promote the notion that the elderly are using up all the resources of the NHS? However, does the Minister agree with Professor Richard Himsworth, of Cambridge, who clearly demonstrated that it is not the elderly who are burning up NHS resources but rather the dying? It is only that it so happens that most people are old when they die. However, if they die in their teens or twenties they burn up just as much in the way of resources.

Lord Hunt of Kings Heath: My Lords, I do not disagree with that comment. We should not ever begrudge the resources used by the NHS in providing support and care for older people. However, it is essential to ensure that a consistent and high quality standard of service is maintained throughout the NHS. That is what the national service framework for older people will enable us to provide.

Organophosphates: Workshop on Research

The Countess of Mar: asked Her Majesty's Government:
	What was the outcome of the workshop on research on organophosphates held on 28th March.

Baroness Hayman: My Lords, this broadly based scientific workshop was set up to assist the development of a targeted research programme, taking forward the recommendations of the Committee on Toxicity and other research questions identified in the workshop. It was an extremely productive day, with useful input from all those who attended. The record of the proceedings has now been finalised and is being made public. It is being published on the MAFF, Department of Health and HSE websites and copies are being sent to all participants. Copies have also been placed in the Libraries of both Houses.

The Countess of Mar: My Lords, first, perhaps I may thank the Minister for organising the workshop. The noble Baroness will know that for many years I have been asking for just such a workshop. Perhaps I may also express my gratitude to her for the help that she has given to OP sufferers.
	Can the Minister tell the House whether extra research will be undertaken as a result of this workshop? Furthermore, will that research concentrate in particular on the synergistic effects of using combinations of organophosphates, either two together, with synthetic pyrethroids or with phenols? I understand that blood tests can be undertaken at Ninewells Hospital in Dundee to see whether antibodies can be made to these. Furthermore, can she encourage the development of the unit at the Middlesex Hospital which is investigating the neurological effects?

Baroness Hayman: My Lords, I am grateful to the noble Countess for her remarks. She will be aware that the Committee on Toxicity recommended that research be undertaken into a number of specified areas. The reason for holding the workshop was in order to investigate whether it was important to look into additional, broader areas. We are building up the research requirements document which will be published and will call for bids by open competition to address research questions. We hope to be able to publish that document before the summer break. I shall ensure that the issues pointed out by the noble Countess--I appreciate that she has identified certain specific areas--will be taken into account when we come to draw up that research requirements document. Equally, I shall look into the issues surrounding support for particular services also mentioned by the noble Countess.

Lord Clement-Jones: My Lords, whatever is the outcome of any new research, does the noble Baroness accept that, in effect, her ministry forced the use of organophosphates for 10 years and then proved astoundingly complacent about initiating investigations into the misery that that use has caused?

Baroness Hayman: My Lords, I do not accept the noble Lord's suggestion that the Government have been complacent in any way. We have put more effort into investigating OPs than I believe has ever been done before. The Committee on Toxicity was asked to take a fresh and completely independent look at the toxicity of OPs. On the basis of its results, not only have we undertaken the extra work necessary but we have taken regulatory action in order to withdraw OP sheep dips from the market while their containers are not considered safe by the VPC. Such action has not been universally welcomed but has been taken on the advice of the regulatory authority.

Baroness Byford: My Lords, will the Minister give more information as regards the outcome of the meeting that was held on 28th March? My understanding is that a great deal of evidence came out of that meeting and the Minister has suggested that research will be undertaken. Will she say more about the timing and the programme? She said that the report will be published in the summer. How soon will the suggestions in the report be followed up?

Baroness Hayman: My Lords, I am not certain that new evidence was presented at the workshop. It was a matter of bringing together people who had worked in fields slightly peripheral to the mainstream investigations into OPs. It has been of particular concern to sufferers that we should investigate the database of people who believe that they are suffering from the effects of OPs. We are funding a study to do just that and the work should get under way shortly, before the research requirements document to which I alluded is published. When I attended the workshop, one of the main areas of concern related to the potential effects on children and foetuses in the womb. We need to look carefully at whether that matter should be included in research requirements.

Lord Cocks of Hartcliffe: My Lords, did the workshop consider rumours that French wine barrels are treated with organophosphates?

Baroness Hayman: Not while I was there, my Lords. Having looked briefly at the report published today, I have not seen a reference to the issue. If it is of concern to my noble friend, I shall certainly investigate whether it should be examined in more detail.

The Duke of Montrose: My Lords, the Minister spoke of the Government withdrawing organophosphates from sheep dip because of inadequate containers. Will she indicate when there will be containers that the Government will approve?

Baroness Hayman: My Lords, the question is when the industry will produce containers that are considered by the Veterinary Products Committee to be safe for use. I understand that several suggestions for new container design are currently being examined by the committee and that it hopes to give advice to the licensing authorities next month.

Roadworks

Lord Peyton of Yeovil: asked Her Majesty's Government:
	Whether they will either take powers to reduce the number of companies now at liberty to dig holes in the road or advise the chairmen and chief executives of those companies how they might limit the inconvenience to the public.

Lord Sainsbury of Turville: My Lords, the New Roads and Street Works Act 1991 imposes a duty on street authorities to co-ordinate works, and the Government welcome the launch of the Central London Partnership earlier this month. They hope that it will be successful and, if successful, that it will be extended more widely. The Government also intend to implement Section 74 of the Act to allow utilities to be charged for occupying the road longer than an agreed period.
	The Government are willing to look at new measures to reduce disruption but do not intend to reduce the number of companies with the right to dig new holes in the road as they believe that effective competition is the best way to increase choice, promote enterprise and bring down prices for consumers.

Lord Peyton of Yeovil: My Lords, I hope that the noble Lord will accept my assurance that, when I tabled this Question, I had no idea that Thames Water, egged on by one of the noble Lord's right honourable friends, would select today to announce that it is to dig 3,000 new holes in London's roads this year. Will the noble Lord wrack his brains as to whether there is any other capital city in the world where this kind of mess would be tolerated? Will the noble Lord--or perhaps his noble friend on the Front Bench--explain why people who make a filthy nuisance of themselves on the roads do not pay for the privilege, while the rest of us do? I am sorry that the Government Chief Whip is no longer in his place. Perhaps the noble Lord will have a word with him and urge him to give the excellent Bill that I introduced a week or so ago a fair wind. Then these pestilential people will be paying £1,000 per day for a very small section of road.

Lord Sainsbury of Turville: My Lords, I am happy to accept that it is entirely a coincidence that the issue of digging holes for water repairs has been raised today. It stems from the suggestion by the water regulator that the major leakages that are taking place should be repaired properly. That is the reason why Thames Water has suggested that it will have to produce more holes. It is perfectly reasonable to suggest that Thames Water should have proper regard to the number of holes it digs in roads but at the same time properly conserve water. Those are two objectives that it should be set, and it should be able to abide by both.

Lord Strabolgi: My Lords, is my noble friend aware that there has been considerable disruption to the streets around Victoria for several weeks, with pneumatic drills, noise and dirt, and traffic lights put out of order at crossings, presenting a danger to pedestrians? What is the purpose of it all? This is not for water--there must be some other reason. Who gave these companies permission, and what is it for?

Lord Sainsbury of Turville: My Lords, I cannot comment on individual cases and particular holes. My area of responsibility is the licensing of telecommunications companies, to which the Question relates. I would point out that the major initiative taken by the street authorities in the Central London Partnership is exactly the kind of initiative that we want to see in order to make certain that work of this kind is properly co-ordinated. Most people accept that much of this work has to be done. We all want to see it properly co-ordinated so that when a street is blocked and people try to find another route they do not also find that road blocked. It requires co-ordination. I welcome the fact that the Central London Partnership is attempting a major initiative to co-ordinate the work.

Lord Skelmersdale: My Lords, if we have lane rental for road repairs, why can we not have it for disrepairs?

Lord Sainsbury of Turville: My Lords, lane rental is for disrepairs/repairs of this kind. That is the point. We shall have to continue to repair roads. The major issue is the attempt to co-ordinate the work so as to minimise inconvenience to road users.

Baroness Thomas of Walliswood: My Lords, will the noble Lord agree that his original Answer gave the impression that he felt that the more competition there was in digging holes, the better it would be for London and other major cities? I invite him to withdraw that impression. More seriously, will the Minister assure the House that when he meets the captains of this particular industry he will try to get them interested in this problem, if only for the sake of public relations? Only when there is a direction from the top will there be a country-wide approach to the problem.

Lord Sainsbury of Turville: My Lords, if I in any way gave the impression that telecommunications companies were there to compete in digging holes, I withdraw that immediately. Their primary function is to provide telecommunications services. That is why this matter is the responsibility of the DTI. The DTI is in discussion with telecommunications companies to make certain that we try to achieve best practice in this regard and to raise performance in what is an intolerable situation for many road users.

The Countess of Mar: My Lords, does the Minister believe that it is beyond the wit of man to invent a machine that can dig a narrow channel, lay a cable and backfill all in one go, with small road works at junctions? Will the Government consider offering a prize to an entrepreneur who can invent such a machine?

Lord Sainsbury of Turville: My Lords, if that would in any way reduce the number of questions raised on holes, personally I would offer such a prize.

Lord Bruce of Donington: My Lords, does my noble friend agree that, although much of the existing dislocation has been caused by the activities of water companies, by and large the field goes much wider? In view of the Minister's Answers to previous Questions on this subject, does he agree that the Department of Trade and Industry has issued open licences to many of those who now dig up the roads? Do the Government have any powers either to revoke those licences or enable the people of London to exert their will in this matter?

Lord Sainsbury of Turville: My Lords, as I have said in the past, 86 companies have the right under telecommunications licences to carry out work which is a major cause of holes in roads. This is part of a major programme to install the infrastructure that we need for the 21st century. We do not intend to reduce the number of licences because we believe that this is an essential piece of infrastructure. Within the terms of the Act and European legislation we must adopt a fair policy towards all companies.

Lord Brabazon of Tara: My Lords, a few weeks ago in a debate initiated by my noble friend, the Minister announced that Section 74 of the New Roads and Street Works Act would be implemented. Can the noble Lord tell the House what progress has been made in that regard? Have the necessary orders been drafted and, if so, when will they be laid before the House?

Lord Sainsbury of Turville: My Lords, the regulations are being drafted. It will take a considerable time as this is a complicated matter. However, we hope to achieve our aim before the end of the year.

Lord Peyton of Yeovil: My Lords, will the Minister contact the chairmen of the companies concerned and tell them what pests they are? They give the appearance of lacking the manners or wit to understand the annoyance they cause. Surely, the Government should give them a friendly prod.

Lord Sainsbury of Turville: My Lords, we are perfectly aware of the situation. The question is how to devise a course of action which will improve the situation rather than simply expressing aggravation about it.

House of Lords: Public Awareness

Lord Phillips of Sudbury: asked Her Majesty's Government:
	How they plan to stimulate public awareness of, and involvement with, the work of the House of Lords.

Baroness Jay of Paddington: My Lords, overall this is an area which is the responsibility of the House itself, not Her Majesty's Government. However, I believe that the noble Lord, Lord Phillips, is himself well placed to offer ideas on, and to contribute to, the wider understanding of the work of the House of Lords. There are many other noble Lords in all parts of the House--obviously, it would be invidious to name them--who are equally successful in promoting public awareness. I would be encouraged if the House was accurately judged as an important part of the legislature and Peers as hard-working Members of Parliament, rather than, as is sometimes the case, colourful characters in a bizarre comic opera. But, as always, it is the responsibility of Peers themselves, individually or collectively, to achieve that.

Lord Phillips of Sudbury: My Lords, I am grateful to the Leader of the House for her reply. Does the noble Baroness agree that the great British public is in a state of almost complete ignorance about what is said and done in this place and that that is an evidently self-defeating state of affairs, as recent research and polling data make clear? Is the Leader of the House also aware that, as far as I have been able to assess, we spend less than one penny per head on public information and education about the entire workings of this place? Does the noble Baroness agree that that is scandalously inadequate and, compared with other legislatures, very backward?

Baroness Jay of Paddington: My Lords, as I am sure the noble Lord is aware, since the autumn of 1996 the House has had a dedicated information officer who does a very good job of work. It has also had a dedicated inquiry service since 1998. I refer the noble Lord to his helpful contribution to the debate in this House on 10th May on the workings of the House of Lords in which he said that the Information Office carried out its work "brilliantly". I suggest that we are fairly well served at the moment.

Lord Mackay of Ardbrecknish: My Lords, can I tempt the Leader of the House to agree with me that the best way that noble Lords can stimulate involvement in and public awareness and approval of this House is by actions such as voting against the Government on closed lists for European elections, student fees, free post in London mayoral elections and Section 28? Will the noble Baroness encourage the noble Lord, Lord Phillips of Sudbury, not to "cosy up" to new Labour too much but occasionally to join us in the coming months to increase public approval of your Lordships' House by similar defeats of the Government?

Baroness Jay of Paddington: My Lords, I certainly do not intend to fall to the noble Lord's temptation to intervene in the relationship between the Conservative Opposition and the Liberal Democrat Benches. I point out to the noble Lord that the dedicated information service to which I referred in my Answer to the noble Lord, Lord Phillips, had its busiest day on 11th November 1999 when this House passed the House of Lords Act.

Lord Steel of Aikwood: My Lords, is the noble Baroness aware that the pre-legislative scrutiny by committees in the Scottish Parliament has proved very popular in engaging both the public and civic organisations? Since the Leader of the House made a speech in this House 10 days ago about the possibility of dealing with more legislation by way of committees and electronic voting, will she come to Scotland to see these methods working very successfully in practice?

Baroness Jay of Paddington: My Lords, I always welcome any opportunity to visit Scotland. As I have not yet had an opportunity to see the Scottish Parliament in action that is a particularly attractive invitation. Several points were raised in our useful debate on the workings of the House of Lords on 10th May which referred to some of the very good practices in the Scottish Parliament. That is an attractive invitation.

Lord Haskel: My Lords, does my noble friend agree that a good way to inform the public about what we are and what we do is by each Peer having a website to tell the public about the work of the House and the interests and expertise of noble Lords? Does my noble friend agree that that would provide some means of communication with the public?

Baroness Jay of Paddington: My Lords, I very much welcome my noble friend's energy in this regard. It is up to individual Peers to create the appropriate impression of their work in your Lordships' House. As I understand it, the website of the House of Lords is being redesigned to make it more effective and easier to manage for users both in the House and outside. I look forward to seeing the extent of that redesign.

Lord Skelmersdale: My Lords, can the Leader of the House tell noble Lords how many hits the website has had over, say, the past three months and how high up the search engines it is, since those are the two factors which really matter?

Baroness Jay of Paddington: My Lords, I do not have the precise figures broken down in that way. The only information I have, which I believe covers both the dedicated call line and website hits, is that inquiries are running at about 2,500 to 3,000 a month. If I can obtain the more detailed information that the noble Lord requests I shall write to him.

Electronic Communications Bill

Read a third time, and passed.

Children (Leaving Care) Bill [H.L.]

Read a third time.
	Clause 2 [Additional functions of local authorities in respect of certain children]:

Earl Howe: moved Amendment No. 1:
	Page 2, line 33, leave out ("aged sixteen or seventeen") and insert ("between the ages of sixteen and twenty-one").

Earl Howe: My Lords, in moving Amendment No. 1, I speak also to all the other amendments in my name. As we reach the final stages of this short but important Bill there is one issue above all others that we have debated at earlier stages which remains to be resolved. I refer to the question of whether the new duty on local authorities to assess and meet the needs of eligible young people should extend beyond the limited period allowed for on the face of the Bill. The case for extending this duty beyond a care leaver's 18th birthday up to and including the age of 21 is, I believe, overwhelming. It is a case that was strongly recommended by Sir William Utting in his report on the review of safeguards for children living away from home and was endorsed wholeheartedly by the Select Committee on Health in another place.
	Nor is there any doubt among the many voluntary organisations working in the care system and assisting care leavers that to limit the scope of the new duty to the two years immediately following a young person's discharge from care would be profoundly short-sighted. As noble Lords from all sides of the Chamber argued in Committee, we can see from examples of work done in various parts of the country how cost-effective it is to provide good quality support to care leavers throughout their first four or five years of independent living. The evidence can be seen in lower rates of offending, acquiring skills for life, maintaining a home, and building that essential quality of self-esteem. By contrast the statistics for those care leavers who are not so fortunate in terms of aftercare tell a very different and depressing story.
	I am certain that the Minister needs no persuading on the merits of these arguments. Indeed, it is clear from all that he has said that the issue for the Government is not whether extended support should be given to care leavers, but when. That issue depends on the availability of resources. Those of us who have worked in government departments will know how easy it is for others outside government to make demands on the budget when the reality for Ministers is a good deal more complex and difficult. Quite often, chief among those difficulties is the process of obtaining agreement from the Treasury.
	However, one significant thing has happened since we first began debating the Bill last December and since we last debated it on Report; namely, the pledge from Ministers of very substantial additional resources for the health budget with effect from next year. In the light of that announcement, is the Minister able to say anything more on funding? In making that request, my hopes are high. A number of amendments, grouped with my amendment, have been tabled by the Government on the issue of extended support. Without wishing to pre-empt the Minister's remarks, I believe that I am right in interpreting the amendments as a significant move by the Government in the direction of the position that I and other noble Lords have been asking them to take. I am grateful to the Minister for his courtesy in letting me have the text of these amendments on Friday and for the helpful explanatory letter which accompanied them.
	If I have understood the government amendments correctly, they represent very good news indeed. They appear to fulfil the undertaking made by the Minister in Committee on providing extended support for care leavers for training, education and employment. Equally, they appear also to encompass the continuing support proposed in my amendments. I should be grateful if the Minister could answer two questions. First, if the government amendments are accepted, the new duties to be placed on local authorities will apply to care leavers, or "former relevant children" as they are termed, up to the age of 21. Can the Minister say whether that means until the child or young person reaches the age of 22 or, as I slightly fear that it means, up to but not beyond his or her 21st birthday?
	Secondly, I am sure that it will be of immense interest to the House if the Minister can now say when the Government propose to bring the new provisions into effect. The noble Lord may be unable to be too forthcoming. I am reminded of Sir William Utting's words in his report. He believed, and still does I trust, that if there is a time to make these changes, it is now or as soon as possible. I look forward to hearing from the Minister and other noble Lords. I beg to move.

Lord Clement-Jones: My Lords, the aim of the amendment--it was put forward in Committee and on Report--is to ensure that local authorities are under a duty to meet the continuing assessed needs of young people up to the age of 21 who have previously been in care. This would provide a safety net for all those young people who leave care and get into difficulties later. The view of all sides of the Chamber in Committee and on Report was that young people leaving care have to cope with the challenges and responsibilities of major changes in their lives at a far earlier stage than other young people. Yet they face additional problems purely as a result of having been in care.
	It cannot be right that young people in care must go to great lengths to obtain the opportunities that other young people take for granted. It cannot be right that children and young people leaving care have to fight for financial and practical assistance to stay on a course, in a job, or in a home where they feel secure and happy. I am glad to say that the amendment was supported by the Association of Directors of Social Services.
	On 10th February in the debate in Grand Committee, and on 9th March on Report, the Minister expressed his agreement with the principle of the need to extend the proposed new duty to care leavers up to the age of 21. He said that the Government were committed to doing that as soon as possible. However, the problem as he expressed it was essentially one of timing. On these Benches, although we understood the timing difficulties faced by the Government, and the fact that the Comprehensive Spending Review round two had not yet pronounced, we were firmly of the view that the duty should be put on the face of the Bill. A powerful moral and practical case for pressing ahead was made by Sir William Utting in the House of Lords at a meeting in January. He concluded:
	"A better time for pressing ahead is unlikely to occur. If it is not done now, can it ever be done?"
	We are delighted on these Benches, therefore, that after consideration the Minister has decided to accept the arguments put forward on all sides of the House. I should like to join the noble Earl, Lord Howe, in thanking the Minister for his courtesy in writing to me on Friday announcing that decision. I pay tribute at this stage to the consortium of voluntary organisations working with looked-after children led by First Key which campaigned so effectively and gave us such valuable support in arguing the case.
	I recognise that much of the efficacy of the amendment tabled by the Minister will depend on the appointed date chosen. I hope that the Minister's influence, which has proved so considerable to date, will extend to ensuring an earlier appointed day. Guidance, however, on when that appointed day will be would be much appreciated. I look forward to hearing from the Minister.

Baroness Masham of Ilton: My Lords, I support the amendment. Many young people who have been in care or are coming out of care are disabled or have learning difficulties, and the process therefore takes much longer. It is an important matter.
	I congratulate the Minister on his hard work on, and interest in, the Bill. I was surprised that more noble Lords did not take sufficient interest in the Bill. It is exceedingly important. If one can prevent people being sucked into a life of crime, it is well worth while. That is of great importance to the families, the young people and to the country because it saves money.

The Earl of Listowel: My Lords, I support the amendment and put forward one further argument. We have discussed the way in which young people have been let down before they arrived in care and while in care. The Government's innovations--the young person's assistant and the pathway plan--will give those young people the additional support they need to make a go of life. However, if the young person's assistant does not have the authority to require local authorities to provide the necessary facilities agreed between the young person and his assistant, there is the danger that the trust between the young person and his adviser will be lost. We have talked often of the danger of estrangement. It is an important consideration. I, too, welcome the happy news of the Government's concession with regard to training and education.

Baroness Thornton: My Lords, I welcome the success and my congratulations on the cross-party achievement. We have all worked together to make the Bill more successful. I have worked with children in care--indeed, many years ago I worked in a residential home--and this Bill is the most important piece of legislation I have participated in since my introduction two years ago. We know that the passing of the Bill will mean something real to a group of young people who are most disadvantaged and in need of support. I congratulate the Minister and thank him for all his efforts on our behalf.

Lord Hunt of Kings Heath: My Lords, it is tempting to quit while we are ahead in the mutual congratulations. It is a reflection on our serious and considered debates on the Bill throughout its stages in this House. It is also about our united determination to do much better for looked-after children and looked-after children who have left care.
	The stark statistics which I quoted at Second Reading resulted in our discussions on the amendments: 75 per cent of young people leaving care have no educational qualifications; up to 50 per cent are unemployed; and up to 20 per cent experience some form of homelessness within two years of leaving care. Such statistics make me believe that the Bill will enable us to provide the support that has been so sadly lacking in so many parts of the country for these young people.
	The development of a much enhanced service and the legislation that is before us rests on current good practice within the system. It is as well also to acknowledge the work of some local authorities in providing effective support.
	The noble Earl, Lord Howe, said that it is "when" and not "if". That takes us to the substance of what is proposed: ensuring that young care leavers receive the support they need. The Government's amendments provide a far-reaching and coherent package for support for these young people. In beginning my remarks I apologise to your Lordships for the lateness in their tabling. However, given their welcome, I am sure that I can ask indulgence.
	There is no doubt that support for care leavers aged 18 and over has aroused considerable passion and debate. Noble Lords from all sides of the House have made the point that young people from a normal family background can usually expect to be able to ask for help and support from their parents into their 20s and in some cases even longer. Noble Lords have made the point that young people leaving care have at least the same need for such continuing support. I agree wholeheartedly.
	The amendments are about making sure that care leavers receive the support they need as young adults. Amendment No. 5 removes any ambiguity about the status of a young person who is an eligible child and leaves care at 18. Such a young person skips, as it were, the status of relevant child, as relevant children are those who leave care at 16 and 17, qualifying for the new arrangements. It might therefore seem that such a young person would not qualify for support after 18, but this amendment makes it quite plain that they are to receive these continuing duties from their responsible authority.
	In addition, through these amendments we have brought together all the provisions for continuing support for former relevant children, so that they will sit as a single package at new Section 22C rather than being scattered through the Bill. I believe that that approach has a number of benefits. First, it makes this part of the Bill a good deal clearer. As we have debated the legislation, we have all had to wrestle with the fact that it is complex. We have tried to balance concision against repetition. This new presentation introduces some repetition, but I hope that your Lordships will agree that it is a price worth paying for the clarity it offers.
	Amendments Nos. 3, 6 to 10 and 13 to 15 are all drafting amendments, mainly consequential on grouping all these duties together in new Section 23C. Finally, Amendment 11, at subsection (5), introduces new duties whereby local authorities must provide assistance to their former relevant children.
	We have agreed that we would want to see those duties introduced as soon as possible, but we have so far failed to agree how they should appear in the Bill. The Government's position continues to be that implementation will occur when resources permit and at levels which resources permit, with differential commencements if necessary. In laying the amendment, I must again stress that we cannot anticipate the outcome of the spending review. It would therefore fall to health Ministers to defer implementation or to meet any costs arising from the amendments by reprioritisation within the Department of Health allocation in the event that the spending review did not award sufficient funds for this purpose.
	Given that position, which will not come as a surprise to noble Lords, the noble Lord, Lord Laming, offered us a way through our impasse when he spoke in Committee. He pointed out that it is not uncommon for Bills to be passed without a final commitment to a timetable for implementation either for all or part of the Bill. It remains a matter for government to decide when to commence any of the Bill's provisions.
	We have listened carefully to the arguments which noble Lords have made repeatedly throughout debates on the issue. Noble Lords are rightly concerned that there should be no shred of ambiguity about the Government's commitment to these young care leavers to ensure that they receive the support which will enable them to live fulfilled and productive lives as full members of society. That is why we have decided that the new duties should appear on the face of the Bill to be implemented as soon as we have secured the resources to support them.
	The amendment to new Section 23C(5)(a) imposes a new duty on a responsible authority to assist a former relevant child up to the age of 21 with the expenses associated with employment. I say to the noble Earl, Lord Howe, that that means on the person's 21st birthday. The amendment at new Section 23C(5)(b) imposes a new duty on a responsible authority to assist a former relevant child with the expenses associated with education or training. In this case, the duty applies until the end of the care leaver's agreed programme of education or training, even if that takes him past the age of 21. This is another place where this approach offers more than was before us previously.
	The amendment at new Section 23C(5)(c) imposes a new duty on local authorities to provide general assistance to care leavers aged 18 to 21 if their welfare requires it. That assistance can be in kind or, if appropriate, in cash. As ever, the key mechanism for this is the pathway plan. A young person will always keep his pathway plan until he is 21 and it will continue to be reviewed and revised until then.
	However, if the local authority continues to assist someone in education or training, new Section 23C(8)(b) ensures that he will keep his personal adviser and his personal plan, which will continue to be reviewed and revised until that support comes to an end. So it is possible to envisage a case where someone comes very late indeed to education, starts his GCSEs just before the age of 21 and is assisted by the local authority through a complete course of education to degree level or even beyond. That meets an important point which was raised in Committee.
	The amendment at new Section 23C(9) requires the authority to disregard any gaps in attendance for reasons such as illness so long as the young person resumes the course as soon as possible. New Section 23C(10) obliges the responsible authority to provide vacation accommodation to young people whom they are assisting with higher education, should they need it.
	I hope that noble Lords will agree that this package of support is a significant step forward for young people aged 18 and over who have left care. It treats them as adults operating in the adult world, but it provides support for them while they find their feet. It seems to me to be very much a feature of the Bill that support and assistance will be tailored to young people's individual needs and circumstances. Therefore, the provisions mirror much more closely what a young person could expect from his family.
	I believe also that the provisions for support through education and training should encourage more young people to take up those opportunities and so improve their chances of a rewarding career. No longer will we have a situation in which as many as 75 per cent of young people who leave care have no educational qualifications. I trust that noble Lords will support the amendments.

Baroness David: My Lords, I should like to thank the Minister for sending me the amendments at the weekend. I was most grateful and I congratulate him. I do not know whether the lateness of the amendments was a sign that he had to fight hard in the department to get them. However, he has done extremely well. We are very pleased and grateful to him.
	I am glad that he said what he did about those who enter education rather late. They may not have finished by the time they reach 18 or 21 but they will continue to receive some help and advice, perhaps by means of accommodation or cash. However, I believe that altogether it represents a very happy outcome for the Bill and, again, I congratulate the Minister. I hope that it will not be too long before it can be implemented, and I hope that he will continue to fight for that.

Lord Carter: My Lords, perhaps I may remind the House that at Third Reading only the mover of the amendment should speak after the Minister. However, in the general atmosphere of good will that prevails, perhaps we shall ignore that.

Baroness Knight of Collingtree: My Lords, I am most grateful to the noble Lord. I much regret that, due to other duties in the House, I have not been able to take part in the Bill before now. I have one specific question to which I should be most grateful for an answer. That question arose because of experience that I have had in connection with children's committees at local authority level. I have known of occasions when children who leave care have been allocated a flat but have not had the slightest idea how to shop, cook or do anything connected with looking after themselves in that flat. Do the amendment that we are now discussing (which I have been following carefully) and other amendments deal with that point?

Lord Hunt of Kings Heath: My Lords, I believe that the noble Baroness has made a very important point. The whole purpose of the Bill as it stands before your Lordships' House is to ensure that a pathway plan and young person's adviser provide an infrastructure of support which will not allow a young person simply to be placed in accommodation or elsewhere and left to fend for themselves. The purpose of the pathway plan and the advice from the young person's adviser is to enable young people more easily to cope in those circumstances. I believe that the noble Baroness has raised a most important issue.

Baroness Hanham: My Lords, I noticed the Chief Whip's eye on me and I shall be brief. I wish to ask a very short question. During the course of the Bill, I noticed with interest that the Minister talked of cash being available in exceptional circumstances. However, just now he referred to "appropriate circumstances". They are not the same. The words "appropriate circumstances" provide a wider definition. I was about to question the Minister as to whether "exceptional circumstances" are, indeed, wide enough.
	At First Reading I raised a question, which I believe my noble friend has just amplified, with regard to the necessity for young people to be able to budget and to be taught to budget. I believe we agreed that cash would be available. I noticed that in both new Section 24C and now in the new Section 11 it will be available in "exceptional" circumstances. I wonder whether that is too tightly framed.

Lord Hunt of Kings Heath: My Lords, I want to raise two points. When we debated this matter at Second Reading and in Committee, I believe that we agreed that part of the whole package of measures which arise from this legislation is to enable young people to go out into the world with the ability to survive with support that can be given through the young person's adviser and through other mechanisms contained in the Bill.
	The question in relation to resources is important. One of the main purposes of the Bill is to remove the perverse incentives which encourage local authorities to encourage young people to leave care as soon as possible because those young people are eligible to receive benefits and the bill does not then fall on the local authority. Importantly for 16 and 17 year-olds, the Bill changes the circumstances so that a ring-fenced budget will enable a local authority to provide proper support, including, of course, issues in relation to the handling of resources.
	I believe that the point raised by the noble Baroness relates to people aged 18 and over who become eligible for benefits. Therefore, the circumstances in which additional assistance may need to be given in cash would be exceptional. I hope that I have clarified that point.

Earl Howe: My Lords, as always, the Minister has been very clear and helpful in speaking to his amendments. I shall not spoil the mood of general rejoicing by qualifying my thanks to him in any way. It was not realistic to expect that a commencement date for the new provisions would appear on the face of the Bill; nor, indeed, was I seeking that. It must be enough for us to place our trust in the Minister's assurances given today about the commitment that exists in his department on the importance of these matters.
	This has been a most rewarding Bill in which to take part, not simply for the subject matter which, as the noble Baroness, Lady Masham, rightly said, is of great importance, but for the way in which the Minister personally has listened and responded to the concerns expressed by noble Lords throughout the Bill's stages. I thank him for that. I believe that the House has done its work well and I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 2 not moved.]

Lord Hunt of Kings Heath: moved Amendment No. 3:
	Page 3, line 18, leave out ("subsection (8) or under section 24A or 24B") and insert ("this Part").
	On Question, amendment agreed to.
	[Amendment No. 4 not moved.]

Lord Hunt of Kings Heath: moved Amendments Nos. 5 to 11:
	Page 4, line 19, leave out from ("the") to end of line 25 and insert ("duties provided for in this section towards--
	(a) a person who has been a relevant child for the purposes of section 23A (and would be one if he were under eighteen), and in relation to whom they were the last responsible authority; and
	(b) a person who was being looked after by them when he attained the age of eighteen, and immediately before ceasing to be looked after was an eligible child,
	and in this section such a person is referred to as a "former relevant child.").
	Page 4, leave out lines 26 to 29.
	Page 4, line 30, leave out ("The first duty is") and insert ("It is the duty of the local authority").
	Page 4, line 31, leave out ("him") and insert ("a former relevant child").
	Page 4, line 34, leave out ("The other duties are") and insert ("It is the duty of the local authority").
	Page 4, line 36, leave out ("him") and insert ("a former relevant child").
	Page 4, line 38, at end insert--
	("(5) It is the duty of the local authority to give a former relevant child--
	(a) assistance of the kind referred to in section 24B(1), to the extent that his welfare requires it;
	(b) assistance of the kind referred to in section 24B(2), to the extent that his welfare and his educational or training needs require it;
	(c) other assistance, to the extent that his welfare requires it.
	(6) The assistance given under subsection (5)(c) may be in kind or, in exceptional circumstances, in cash.
	(7) Subject to subsection (8), the duties set out in subsections (3), (4) and (5) subsist until the former relevant child reaches the age of twenty-one.
	(8) If the former relevant child's pathway plan sets out a programme of education or training which extends beyond his twenty-first birthday--
	(a) the duty set out in subsection (5)(b) continues to subsist for so long as the former relevant child continues to pursue that programme; and
	(b) the duties set out in subsections (3) and (4) continue to subsist concurrently with that duty.
	(9) For the purposes of subsection (8)(a) there shall be disregarded any interruption in a former relevant child's pursuance of a programme of education or training if the local authority are satisfied that he will resume it as soon as is reasonably practicable.
	(10) Section 24B(5) applies in relation to a person being given assistance under subsection (5)(b) as it applies in relation to a person to whom section 24B(3) applies.
	(11) Subsections (7) to (9) of section 17 apply in relation to assistance given under this section as they apply in relation to assistance given under that section.".").
	On Question, amendments agreed to.
	Clause 3 [Personal advisers and pathway plans]:

Lord Hunt of Kings Heath: moved Amendment No. 12:
	Page 5, leave out lines 4 to 7 and insert--
	("(2) Personal advisers appointed under or by virtue of this Part shall (in addition to any other functions) have such functions as the Secretary of State prescribes.").

Lord Hunt of Kings Heath: My Lords, on previous occasions many noble Lords have recognised the central importance of the personal adviser to the success of the new arrangements for young people in and leaving care. On Report I stated that the Government intended to bring forward an amendment at Third Reading to allow for greater clarity as to the functions of the personal adviser and his or her relationship with the local authority. That is the purpose of the amendment before us.
	The amendment makes clear that regulations provided for at new Section 23D may set out the functions of the personal adviser in respect of all the groups of children and young people who may be entitled to one. That means eligible children, relevant children, former relevant children and any other group of young people for whom the Secretary of State prescribes a personal adviser.
	This amendment is straightforward. It seeks to provide greater clarity as to the functions of the personal adviser and the regulations that the Government will be putting in place to prescribe those functions. I beg to move.

On Question, amendment agreed to.

Lord Hunt of Kings Heath: moved Amendments Nos. 13 and 14:
	Page 5, line 14, leave out from ("under") to end of line 15 and insert ("this Part, both while they are looking after him and later;").
	Page 5, line 21, leave out ("section 23B(8), 24A or 24B") and insert ("this Part").
	On Question, amendments agreed to.
	Clause 4 [Advice and assistance for certain children and young persons aged 16 or over]:

Lord Hunt of Kings Heath: moved Amendment No. 15:
	Page 6, line 45, leave out from ("duty") to ("empowered") in line 1 on page 7 and insert (", or are").
	On Question, amendment agreed to.
	Clause 6 [Exclusion from benefits]:
	[Amendment No. 16 not moved.]
	Clause 6 agreed to.
	Clause 8 [Interpretation, commencement, extent, Wales and short title]:

Lord Hunt of Kings Heath: moved Amendment No. 17:
	Page 10, line 16, leave out ("which also extends") and insert ("and this section, which also extend").

Lord Hunt of Kings Heath: My Lords, this is a technical amendment to make clear that the ancillary provisions of Clause 8 also extend to Scotland. Noble Lords will be aware that the intention is that Clause 6 in respect of welfare benefits will not be commenced in Scotland until there is Scottish legislation in place to provide support for care leavers. This amendment will allow Clause 6 to be commenced in Scotland by order at the appropriate time. I beg to move.

On Question, amendment agreed to.
	An amendment (privilege) made.

Lord Hunt of Kings Heath: I beg to move that the Bill do now pass.
	Moved, That the Bill do now pass.--(Lord Hunt of Kings Heath.)
	On Question, Bill passed, and sent to the Commons.

Lord Hunt of Kings Heath: My Lords, I beg to move that the House do now adjourn during pleasure. In moving this Motion, I suggest that we resume not before 4 p.m.
	Moved, That the House do now adjourn during pleasure.--(Lord Hunt of Kings Heath.)

Lord Higgins: My Lords, the House ought to have some explanation.

Lord Hunt of Kings Heath: My Lords, the explanation I suggest is the expeditious nature of our deliberations on the Children (Leaving Care) Bill.

Lord Higgins: My Lords, that really is not a satisfactory answer. There may well be one. If every time the House proceeds to make rapid progress, we then find that we adjourn during pleasure, proceedings will be unduly delayed and we will all get to bed much later.

On Question, Motion agreed to.
	[The Sitting was suspended from 3.53 to 4 p.m.]

Child Support, Pensions and Social Security Bill

Baroness Hollis of Heigham: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
	Moved, That the House do now again resolve itself into Committee.--(Baroness Hollis of Heigham.)

On Question, Motion agreed to.
	House in Committee accordingly.
	[The DEPUTY CHAIRMAN OF COMMITTEES (Lord Brougham and Vaux) in the Chair.]
	Clause 56 [Rights of appeal]:
	[Amendment No. 169 had been withdrawn from the Marshalled List.]
	Clause 56 agreed to.
	Clause 57 [Time limit for appeals]:
	On Question, Whether Clause 57 shall stand part of the Bill?

Lord Astor of Hever: I rise to give my objections to the Question that Clause 57 stand part of the Bill. We seek to ensure that the present time-limit in relation to an appeal will remain as 12 months. We believe that the current time-limit within which to lodge an appeal works satisfactorily. The United States has a 12-month time-limit for its appeals.
	There is some concern that if the time-limit is reduced to six months, servicemen and women who suffer illness or incapacity may not have sufficient time to gather the information necessary for an appeal. Appeals are long and tortuous processes, and such men and women will have had to go through the problems of the initial claim. Accordingly, the 12-month period should remain.

Baroness Carnegy of Lour: I rise to support my noble friend Lord Astor of Hever. The Law Society of Scotland is concerned about this issue. Six months seems to be a short time. I hope that the Minister will give an adequate explanation of why she believes that the people in the circumstances that my noble friend has mentioned will find that six months is long enough.

Baroness Hollis of Heigham: First, I apologise to the House for the delay in business. The preceding business collapsed faster than I had expected. I apologise. Did the noble Lord wish to--

Lord Denham: My Lords, perhaps I have been in this House too long. In the old days, if the noble Lord who was to move the business did not turn up in time, we went on to the next business.

Baroness Hollis of Heigham: There were reasons for the delay which the Front Benches know about, but I apologise.
	This clause provides new time-limits for war pensions appeals. Currently, there are two time-limits, a three-month time-limit and a 12-month time-limit, but some appeals are not subjected to any time-limit. Furthermore, those time-limits can be extended indefinitely if the appellant shows "reasonable excuse" for not bringing an appeal earlier. In practice, almost all late applications are heard and therefore there is no effective appeal time-limit.
	It may help if I describe how the current provisions came about. Much of the war pensions appeals legislation dates from 1943. Naturally, the provisions were generous, acknowledging the very real difficulties that people faced at that time in both claiming a war pension and appealing against decisions. We can see that approach reflected in the test of whether a late appeal should be accepted. The appellant was only required to demonstrate that he, or she, had a "reasonable excuse" for delaying bringing the appeal. Legislators in 1943 did not attempt to provide for the many possible reasons people would have for not bringing an appeal within the specified time. But the legislators always envisaged that all appeals should be subject to a time-limit.
	The effect of using that legislation, more than 50 years later, is that tribunals are asked to consider whether a decision, sometimes made decades before, was made correctly. It is a time-limit about appeals only, and not the initial decision. This is a time-consuming business as the tribunal attempts to ascertain the appellant's circumstances as they existed when the decision was made--possibly 10 years earlier, 20 years earlier or longer--and to apply the medical understanding and legislation that existed at that time. That does not help the tribunal to reach just decisions.
	The provisions in this clause will require appellants to appeal closer to the time when the decision is made, when the facts of the matter are clear and not subject to assumptions about conditions that existed in distant memory. Hence interim decisions will retain the current three-month appeal time-limit but all other appeals will be subject to a six-month time-limit.
	We have proposed a six-month appeal time-limit, which is a more generous time-limit than appeals to almost any other tribunal. This is because we recognise a debt of gratitude and because we need to strike the right balance, recognising that war pensioners' appeals have not previously been subjected to time-limits, unlike other appellants such as social security appellants.
	I am aware that there has been some concern--as voiced this afternoon by the noble Lord, Lord Astor, and the noble Baroness, Lady Carnegy of Lour--that a period of six months does not provide vulnerable and perhaps grieving people with sufficient time in which to bring an appeal. I should perhaps add that, before the appeal time-limit starts, a person will have made a claim for a war disablement pension or a war widows pension, provided the necessary information, and received a notification of the outcome. The appeal time-limit will therefore start some months after the event that precipitated the claim.
	I should perhaps add that introducing these provisions does not alter the position that war pension claims originally are not time limited. It is the appeals only that are to be time limited. Indeed, the War Pensions Agency continues to receive new claims from people who are now identifying conditions that they attribute to service undertaken 50 or more years ago. The appeal time-limit applies only from the time the claim is decided. I also know that people are concerned that there may be changes in medical opinion, and if your Lordships want, I can discuss that further.
	This clause also contains a provision that would enable the appeal time-limits to be varied either up or down. We have no intention of doing that, but we want to see whether the changes that we propose in this clause make good sense. Certainly the advice that we have had from some ex-servicemen's organisations is that they feel comfortable with the proposals.
	We intend to replace the "reasonable excuse" provision with regulations that where there are late appeals, they must be accepted within the 12 months following the statutory appeal time-limit. These regulations, which will be subject to the affirmative procedure, will enable war pensioners to know the circumstances in which a late appeal may be accepted by the presidents of the pensions appeal tribunals.
	Decisions made before the new time-limit is commenced will have transitional protection. People who receive a decision before this provision is commenced will have at least one year from the notification of the decision in which to bring an appeal, excepting those interim decisions that are currently, and will remain, subject to a three-month appeal time-limit. The new appeal time-limits will apply to people for whom decisions are made on and after the commencement date. I should also add--I am sure that this will be of interest to your Lordships--that the War Pensions Agency intends to contact war pensioners, by post and through articles in magazines, to advise them of their new appeal rights and the changes in the appeal time-limits.
	I hope that your Lordships will agree that there is no limit to the time within which the original claim may be brought. Clearly, some illnesses or disabilities may occur significantly later than the point at which the injury occurred. However, we believe that this is reasonable and, as far as I am aware, no deep concerns about the matter have been raised by the relevant organisations. It seems reasonable that the appeal should be within six months of that decision, otherwise a decision could come 20 years after the original circumstance and an appeal 20 years after that. Clearly, it would be unreasonable in those situations to expect a tribunal to be able to make a decision that was informed by the circumstances at the time. I believe that the proposal is reasonable. If, at any subsequent stage, we need to vary it in the light of the workings of the proposals, I shall be happy to come back to your Lordships. I hope that that explanation and putting the matter on the record will be helpful to the organisations concerned. I ask the noble Lord to agree that the clause be accepted by the House.

Lord Astor of Hever: I thank the noble Baroness for that full answer and I thank my noble friend Lady Carnegy for her support.
	In respect of the Minister's answer, I am not convinced that the reasons that we have heard are good enough to reduce the appeal time-limit on the face of the Bill to six months. However, I shall read Hansard carefully and I shall discuss the matter with the Law Society of Scotland and the service organisations. In the mean time, I shall not press my opposition to the Question.

Clause 57 agreed to.
	Clause 58 agreed to.
	Clause 59 [Constitution and procedure of Pensions Appeal Tribunals]:

Lord Astor of Hever: moved Amendment No. 170:
	Page 62, line 42, leave out ("other persons") and insert ("persons with knowledge or experience of service in Her Majesty's naval, military or air forces").

Lord Astor of Hever: In moving Amendment No. 170, I shall speak also to Amendments Nos. 171 and 172. The purpose of Amendment No. 170 is to retain an ex-service member as a member of the tribunals. That is essential to maintain the credibility of the PAT as seen by the appellant. It would not be right to have only civilians sitting in judgment. The purpose of Amendment No. 171 is to remove the option of not having a service representative on the tribunal. We want to ensure that both service and disability representatives are included. Amendment No. 172 would give credibility in the eyes of the claimant that members of the tribunal understand the nature of warfare and service life. Even many widows do not know exactly what their late husbands did.
	These amendments have the support of the Royal British Legion, SSAFA and the RAF Association. I declare an interest as a former Army officer who received a lump sum compensation for noise-induced hearing loss and as president of the Earl Haig branch of the Royal British Legion. I beg to move.

Lord Renton: I support my noble friend, Lord Astor, in this group of amendments. In matters of this sort, as in all matters of justice, it is important not only that justice should be done, but that it should be seen to be done. It is more likely to be seen to be done in fixing service pensions, especially if they are pensions which result from injuries on active service, if those who have the responsibility of awarding and fixing the pensions have the sort of sympathy and understanding needed. Claimants are more likely to get that from people who have themselves served in the Armed Forces.

Baroness Hollis of Heigham: These amendments seek to maintain many of the current arrangements that apply to the composition of the pensions appeal tribunal. Amendment No. 170 would require the Lord Chancellor to appoint a service member to the tribunal. Amendment No. 171 would place a requirement on the Lord Chancellor to appoint lay members with specific experience to the tribunal, and Amendment No. 172 seeks to prescribe the military service the lay member should have.
	The intention of this part of Clause 59 is to enable the Lord Chancellor to create a pool of people with the expertise required to hear all the appeals within the jurisdiction of the pensions appeal tribunal. Pulling together the expertise that is necessary to deal with individual appeals will be a matter for the presidents of the pensions appeal tribunals. As such, the clause provides that each of the tribunal's jurisdictions should have a pool of people with the skills, expertise and experience to decide the issues.
	Subsection (3) of Clause 59 provides that the schedule to the Pensions Appeal Tribunals Act 1943 will include a new paragraph 2A. The first sub-paragraph--that is, paragraph 2A(1)--defines three categories of tribunal members; that is, those who are legally qualified, those who are medically qualified and those termed as "other persons". The following sub-paragraphs stipulate the qualifications required of the tribunal members, describing the legal, medical and other qualifications. As such, it is not appropriate to introduce a definition of "other persons" into that sub-paragraph, particularly in an amendment which does not recognise other expertise that could be helpful to the tribunals. Amendment No. 170 is therefore unnecessary and I hope the noble Lord will feel able to withdraw it.
	Amendment No. 171 would amend paragraph 2A(4) which deals with the definition of "other persons". As written, the clause requires the Lord Chancellor,
	"to have regard to the desirability",
	of appointing persons with knowledge or experience of service in Her Majesty's naval, military or air forces and matters relating to the disability of persons. Amendment No. 171 would make those appointments compulsory.
	It is the intention of the Lord Chancellor always to include people with knowledge or experience of service life and of disablement in the pool of people to hear appeals. The legislation has been phrased in this way to provide for the smaller jurisdictions, such as Northern Ireland, where the number of appeals are low (around 100) and therefore the number of tribunal members is small. In those instances, the unexpected loss of a tribunal member could result in the jurisdiction being incomplete and therefore unable to operate. It is solely to provide for that eventuality that the clause has been phrased in this way.
	But the concerns of the Committee have been heard and I assure Members that the Lord Chancellor will appoint people with service experience to the tribunal. If it helps, and in response to the speeches made by both the noble Lords, Lord Astor and Lord Renton, I am happy to come back on Report with an amendment placing a duty on the Lord Chancellor to appoint persons with knowledge or experience of Her Majesty's naval, military or air forces to the pool of tribunal members; in other words, putting a duty on the Lord Chancellor in the Bill, if that would meet the Committee's concern. I appreciate at the moment it is an understanding. If the Committee is willing, I am willing to respond with a government undertaking.
	Amendment No. 172 also relates to the sub-paragraph which deals with the appointment of "other persons" and provides for people with "similar military experience" to be appointed. Unlike the previous amendment, the problem here is that we are dealing with a group of people who are diminishing in number. The phrase we use in the Bill,
	"knowledge or experience of service",
	will enable the Lord Chancellor to appoint people with a wide range of service experience to the pool of tribunal members. It will be for the independent presidents of the tribunals to allocate people to the individual tribunals. Again, I am more than happy to write on the Committee's behalf to the presidents of the pensions appeal tribunals to ensure that they are aware of the concerns of the Chamber.
	Our problem is that there is a shrinking number of people with an exact match of appropriate service. That is why we are seeking to establish a pool on which the Lord Chancellor may draw and from which the presidents of the tribunals may appoint to any specific tribunal. If it meets the Committee's concern, I shall bring an amendment forward on the face of the Bill for the Lord Chancellor to appoint such a pool, and I shall write to the presidents of the appeal tribunals drawing attention to the anxieties expressed today. With those undertakings, I hope that I have met the noble Lord's concerns and that he will be content to withdraw the amendment.

Lord Astor of Hever: I thank the Minister for that helpful reply and my noble friend Lord Renton for his support. I was comforted by the Minister's reassurance that the Lord Chancellor normally appoints people to tribunals with knowledge and experience of service life. I am sure the Committee will be happy for the Minister to come back with an amendment on Report as she suggested. I shall consider her words in detail and discuss them with the service organisations with whom I have been in touch, for I know this is a matter of great concern to them. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 171 and 172 not moved.]
	Clause 59 agreed to.
	Clause 60 [Composition of central advisory committee]:
	[Amendments Nos. 173 and 174 not moved.]
	Clause 60 agreed to.

Baroness Strange: moved Amendment No. 175:
	After Clause 60, insert the following new clause--
	:TITLE3:("CHAPTER IV")
	:TITLE3:WAR WIDOWS' PENSIONS
	:TITLE3:War widows' pensions--entitlement
	.--(1) The Secretary of State shall review the operation of this section when--
	(a) a report on the armed forces pension scheme has been laid before Parliament by the Secretary of State for Defence; and
	(b) the results of any public consultation upon a report as cited in paragraph (a) above have been published;
	and a report of any review carried out under this section shall be laid before Parliament.
	(2) Subject to subsection (3), a widow in receipt of a widow's pension under any of the enactments mentioned in subsection (4) ("the DSS pension") and in receipt of a pension paid under the Armed Forces Pension Scheme shall on remarriage or when living together as husband and wife with a member of the opposite sex only retain the Forces Family Pension (attributable).
	(3) Subsection (2) does not apply to a widow in receipt of a basic pension under section 44 of the Social Security Contributions and Benefits Act 1992; and a widow in receipt of such a pension who has remarried or is living together as husband and wife with a member of the opposite sex may not retain the Forces Family Pension (attributable).
	(4) The enactments referred to in subsection (2) are--
	(a) the Naval, Military and Air Forces etc. (Disablement and Death) Service Pensions Order 1983, and any order re-enacting the provisions of that order,
	(b) the Personal Injuries (Civilians) Scheme 1983, and any subsequent scheme made under the Personal Injuries (Emergency Provisions) Act 1939,
	(c) any scheme made under the Pensions (Navy, Army, Air Force and Mercantile Marine) Act 1939, or the Polish Resettlement Act 1947 applying the provisions of any such order as is referred to in paragraph (a),
	(d) the order made under section 1(5) of the Ulster Defence Regiment Act 1969 concerning pensions and other grants in respect of disablement or death due to service in the Ulster Defence Regiment.").

Baroness Strange: This amendment puts me fair and square on the horns of a dilemma. I do not know what sort of animal a dilemma is, but I suspect it closely resembles a patchwork, painted, fibreglass cow. A friend of mine jumped on one in Florida last week to celebrate her eightieth birthday and cracked her ribs most painfully. Although not as spry as an 80 year-old, I feel that with this amendment I am being pressed very closely by the dilemma's horns.
	On the one hand this amendment refers to the Armed Forces family attributable pension, which is created by prerogatory instrument and is totally in the domain of the Ministry of Defence. To move it at all in a Bill on social security is therefore irrelevant--and unfair to my noble friend the Minister, who already has a massive Bill on her plate. She has always been a warm and sympathetic friend to the war widows and I hope will continue to be so--as she is to me.
	What makes it worse is something which I discovered only on Thursday: that my noble friend the Minister of State for Defence, Lady Symons of Vernham Dean, is unavoidably away in Washington today and so is unable to answer for her department. That is one horn of the dilemma. It is aggravated by the fact that, even now, the Ministry of Defence is conducting its pension review which should come out this summer. Whether summer starts on May Day or when the cuckoo singeth loud or whether we should "cast no cloots till May be oot" or whether summer is some late, movable feast which waits for the House to rise before deliberations are announced, as has happened before, I do not know. I am a natural optimist and I know that the Ministry of Defence will consider the case of these few ladies with care and with sympathy.
	Some of these ladies, however--and this is the other horn of the dilemma--would like to remarry. I know of at least 10 who would. With the splendid advent of the Prime Minister's baby, we are all thinking about babies. Perhaps these ladies have children who would like to have a baby brother or sister themselves. This second pension has been contributed to by their husband. Both the Royal British Legion and SSAFA support us in our belief that this pension should be for life.
	I know that this is not the time or the place to move the amendment, but these ladies are not proud, arrogant and pushing themselves forward. They are gentle, brave and restrained. I have a clear duty to them to move the amendment so that others can speak on their behalf. I beg to move.

Baroness Fookes: This amendment stands also in my name. I am very anxious indeed to see justice done to this small group of ladies about whom the noble Baroness, Lady Strange, speaks so eloquently, as she has done for many years. Like her, I appreciate that this is not strictly a matter for the noble Baroness; none the less it is an opportunity to state the case once again and also, through the medium of this Chamber, to urge upon the Ministry of Defence the absolute necessity of coming to a decision on their behalf quickly. I am increasingly concerned about the length of time reviews take. It seems to be becoming a substitute for action. I hope therefore that, at the very least, we can urge upon those who represent the Ministry of Defence the necessity for coming to a decision quickly and in favour of these war widows.
	Perhaps I should explain that I have no financial interest but I am a vice-president of SSAFA, which has urgently called for action to be taken. I am also newly appointed as a vice-president of the War Widows Association, of which the noble Baroness, Lady Strange, is president. Slightly strange, you may think, since I am neither wife nor widow; but it is a very important post which I take seriously. I do urge upon the House the importance of looking with sympathy and concern upon the plight of these very few war widows who, in my view, have such a strong case.

Lord Astor of Hever: I strongly support this amendment, so eloquently and clearly moved by the noble Baroness, Lady Strange. The noble Baroness told the House last year that she would return to fight another day, and I am delighted that she has. Like the noble Baroness, Lady Strange, and my noble friend Lady Fookes, I have considerable sympathy for the position in which the Minister finds herself. I know that in opposition and in government she has campaigned long and hard for war widows.
	It is a tragic fact that death can come to very young service personnel. These are not just faceless people. The soldier who drove me throughout my tour of duty in Northern Ireland, Trooper Durber, was subsequently killed there, aged only 26. He left a widow and two young children. Death can also come from the most unexpected quarter. In 1982 a bomb killed an officer, a warrant officer, two soldiers and seven horses in Hyde Park. I had served with the warrant officer, Corporal Major Bright. He left a widow and two children.
	Over the last year this country has had troops--unarguably the best in the world--on active duty in high-risk locations such as Iraq, East Timor, Bosnia, Kosovo, and now Sierra Leone. The Government are responsible for their safety while they are there but also, in the event of any of them being killed, for their widows.
	The question therefore arises of how we as a country look after the widows in a compassionate and responsible way. The answer is quite well, so long as they remain single for the rest of their lives. As soon as they remarry or cohabit, they lose every penny of their pension. We make it financial suicide for them to rebuild their lives and provide stable family units. Their children will not have the chance to belong to a loving family unit again. This really cannot be right.
	Every independent review has recommended a pension for life. Hopefully, the Armed Forces pension review will report soon. Were the noble Baroness, Lady Symons of Vernham Dean, here today, she might have been able to tell the House the date. Even Mr Jeffrey Rooker, the Minister in the other place, has now accepted that there would be minimal cost implications in accepting this amendment. I therefore hope that the noble Baroness will do so.

Lord Craig of Radley: After what has just been said by the noble Lord and by the two noble Baronesses, it does not rest with me to try to make the case further. However, I should like it on record that I have strongly supported this particular proposition for a long time. The situation has seemed to me quite inequitable and I very much hope that, even if it cannot be found a place in this Bill, action will be taken to put right a longstanding and iniquitous wrong.

Earl Russell: I express my regrets to the noble Baroness, Lady Strange, that neither my name nor that of my noble friend Lord Goodhart is on her amendment. Our problem was that we both wished to put our names on the amendment. It took us the immense length of time of 24 hours after Second Reading to resolve that. By the end of those 24 hours there were no spaces left on the amendment. I ask the noble Baroness to accept both our names as being there in spirit.
	We on these Benches are firmly committed to this amendment and have been so committed for a long time. I say "for a long time". We have been debating the issue for a very long time. An overwhelming case has been made out for it many times over. We have been given assurances that it is under review many times over. It is proverbial that hope deferred maketh the heart grow sick. If the noble Baroness is feeling more than a little impatient for the conclusion of these reviews, I would not be surprised.
	I take her points about the flexibility of summer and, in the light of the present state of our climate, one begins to wonder whether summer will in fact ever arrive. I hope that something will happen about this quickly, therefore.
	The position taken hitherto by the Ministry of Defence is completely out of date with modern views about the status of women. As I understand the ministry's thinking, it is that if a woman is being kept by one man she need not be kept by another man. That is completely out of date. The pension should not be seen simply as the substitute for a man. It should be seen as a compensation for a loss, for suffering, and for a loss incurred in the Crown's service.
	Whenever this matter is debated, we hear a great deal about the problem of ring-fencing. I do not believe that to be nearly as difficult as it is made out to be. If officials make out that it is too difficult to cope with, I cannot help thinking that they underrate their own ingenuity. The category of those who are in the Crown's service, in jobs that necessarily incur danger, is limited. However, service in the Armed Forces does incur some danger even in peacetime. Many things have to be done on manoeuvres where some risk is necessarily inherent; indeed, very sadly, some deaths may happen even in carefully and properly planned manoeuvres. So these are deaths in the service of the Crown. If the Crown wants to be loyally served, it must recognise that fact.
	There are problems in the Armed Forces now, with recruitment and, even more so, with retention. The armed services have a considerable struggle in adapting to a world in which women have independent careers. They cannot follow their husbands around the globe because they have interests, bases and prospects of their own. That is just one sub-set of the need of the MoD to come to terms with such social change. If it does not do so, all our Armed Forces will be in danger. I conclude by quoting from a letter written by Lord Howard of Effingham to Lord Treasurer Burghley on the day that the Spanish Armada was sighted off the Lizard:
	"God send Her Majesty not now to stay for charges".

Lord Alli: I rise to express my support for this amendment. I should like to associate myself with all the previous speakers in this respect. I believe that a pension should be for life and that these widows are being treated badly. However, I should like to turn to the question of co-habiting partners and to those who lose a partner in service. In the debate last October, the noble Baroness raised the case of a pilot who lost his life in service. He left a fiancee who was expecting their first child but who was not entitled to a pension.
	I believe that we should review the arrangements for co-habiting partners. Indeed, this seems to be an ideal opportunity to do so. There is much to be learnt from the private sector where the rules as regards co-habitation are much better than those which apply to the public sector; for example, some 75 per cent of pension schemes in the private sector recognise the rights of co-habiting couples. I urge my noble friend the Minister to look at this area in more detail to see what can be done for co-habiting partners.

Lord Mackay of Ardbrecknish: For the benefit of noble Lords who are fairly new to this place, I should explain that I have a special interest in these matters because I preceded the noble Baroness, Lady Hollis of Heigham, in her job at the Department of Social Security and was the Minister with responsibility for war pensions. I am pretty certain that I could give the Committee a preview of the Minister's speech, having made it myself on a number of occasions. I suspect that the noble Baroness will be as unhappy in delivering that speech as I was on the occasions that I had to deliver it. I was successful on all those occasions in persuading this Chamber not to take the matter to a vote, although, as noble Lords may recall, I was less successful on one or two war pensions issues and was defeated by the noble Baroness, Lady Strange, and her large army of supporters. I shall return to that point presently.
	Before the commencement of this debate I checked my file and came across an important letter from the MoD. It was written by the Minister of State for the Armed Forces, a certain Dr John Reid and thus noble Lords will realise that the letter is not exactly of yesterday's vintage. In the letter, Dr Reid says that the,
	"Government has commissioned a comprehensive review of the arrangements for the payment of compensation to Service personnel or their dependants, for injury, illness, or death as a result of their military service ... Experience from the Gulf conflict and operations in Bosnia underlines the need for arrangements which properly reflect the special nature of the commitment which Service men and women make to the defence of our country".
	I should have been quite happy with that and, indeed, with the advice that the noble Baroness will undoubtedly give noble Lords--namely, to await the outcome of that review--but then I noticed that the letter was dated 8th December 1997. That review has been a long time in coming.
	I must repeat the important point that I have made in this Chamber on a number of occasions. Thanks to pension splitting on divorce, which was taken through this place by the noble Baroness, Lady Hollis, and which followed a White Paper that I presented to the House before the 1997 election, we have the following anomalous position. Let us take, for example, two service families who live side by side. One of those couples may divorce and the wife will be able to claim a portion of the pension pot of her former husband. The husband in the other family may be killed, leaving his wife with a widow's pension which I, and war widows, accept is a generous one. So both women would, so to speak, be alone without husbands.
	However, if both women decided to remarry, the divorced woman would keep her share of the pension pot and be able to translate it into a pension when she reached retirement, but the widow would lose hers. That cannot be fair. In my view, the way that we have treated war widows on remarriage has never been fair. It is particularly unfair when both the Government and the Opposition agree that we have made the situation regarding widows' pensions in the military even more ludicrous by way of the pension splitting on divorce.
	On the last occasion that we debated this issue, much was made by the noble Baroness, Lady Symons of Vernham Dean, of the read-across factor. Indeed, so much was made of it that I actually wondered whether the scale of read-across was pretty well equal; in other words, that as many people in the other services of the Crown and of the community are likely to be killed in the line of duty as applies to military personnel. Therefore, I have tabled some Questions on this, relating to "service-attributable deaths" in each of the past five years. In November 1999, the noble Baroness, Lady Symons, replied, and informed me that the total number of "attributable deaths" in the Armed Forces was 138. The noble Lord, Lord Bassam of Brighton, replied regarding the fire service where, of course, dangers are encountered daily. The total number of deaths in that service during those years was 13. The noble Lord also informed me that the total number of deaths in the police service was 28, of whom, rather worryingly, 21 were killed in road accidents.
	It appears from that information that the scale of attributable deaths in the military is quite markedly different from the scale applying to the other services, so I do not want to hear about the read-across. I have a second argument against the latter. I have in mind the fact that this Chamber defeated the then government on the question of restoration of the war widows' pension on second widowhood. As far as I know, no effort has been made to extend the read-across argument to the police, the fire service or anyone else regarding the concession that the Conservative government were forced to make in this respect. Therefore, I hope that the Minister does not have mention of the read-across in her speech and that any such mention has been removed.
	Those are the main arguments that I wish to put before the Committee, but I have just one further point to make. When we discussed this issue last year, I suggested to the noble Baroness, Lady Strange, that she should withdraw her amendment so as to allow the MoD to move quicker. However, we are a year on and nothing much has happened. Indeed, this matter has been debated since 1994. The arguments that I put before noble Lords during the years before the election were, "Just wait! The MoD is reviewing the situation. All will be well; it will come up with a conclusion". The only thing that will force the MoD to come forward with a conclusion is for noble Lords to defeat the Government and insist on this new clause being inserted into the Bill--

Lord Alli: I hope that I may ask a simple question: why did not the noble Lord do this when he was in office?

Lord Mackay of Ardbrecknish: I thought that I had explained that, but the noble Lord was not present when I did so. Like the noble Baroness, Lady Hollis, I was the Minister responsible for social security and I had to deal with the MoD on this issue. I have no doubt that the noble Baroness will have written a few letters to the MoD on this matter; I wrote a few myself. However, all the response I obtained was that there was a review. That is the short answer. Therefore I am aware of the prevarication that arises. I suspect that the noble Baroness, Lady Hollis, is as convinced as I was with regard to this issue. However, the only way that the noble Baroness will be given a sword in her hand is through this Chamber putting the amendment on the face of the Bill. Contrary to the advice I gave last year, I hope that the noble Baroness, Lady Strange, will press her amendment to a Division and that Members on all sides of the Committee will support it.

Lord Renton: It comes as no surprise that perhaps the noble Baroness, Lady Hollis, and, at one time, my noble friend Lord Mackay of Ardbrecknish, with their ministerial responsibilities had it in mind that they had to be fair to widows other than war widows. However, my noble friend Lord Mackay of Ardbrecknish and others who have spoken have already pointed out that war widows are in a more difficult and, indeed, often a more desperate position. I hope that I may emphasise the reasons for that. I do not think that it is unjustifiable to attempt to generalise. One reason is that war widows are nearly always younger than other widows. Another reason is that they and their late husbands have had less chance to build up some savings for their retirement. As has been mentioned, war widows are often left with young families and no husband to support them. They must do their best for their families. If we were to evade the proposals put forward by the noble Baroness, Lady Strange, we would place war widows at a disadvantage which they do not deserve. Therefore I, too, earnestly hope that the Government will be sympathetic towards her amendment.

Baroness Carnegy of Lour: I am sure we are all sorry that the noble Baroness, Lady Symons of Vernham Dean, who is the Minister responsible for defence, is not present. However, I remind the Committee that the Long Title of the Bill includes the following words:
	"to amend the law relating to occupational and personal pensions and war pensions".
	This Bill is about war pensions. The noble Baroness, Lady Hollis of Heigham, who is the Minister responsible for social security, speaks for the whole Government when she replies to this Bill. Therefore we do not want to be told that because the Minister responsible for defence cannot be present this is an inappropriate matter to discuss. I hope that the Minister will not persuade the noble Baroness, Lady Strange, to withdraw her amendment. I believe that it is perfectly appropriate to move this important amendment at this stage. I shall support it if the noble Baroness presses it to a Division.

Lord Davies of Coity: I certainly applaud the confession of the noble Lord, Lord Mackay, when he expressed regret at sentiments that he had expressed on this issue in the past from the Front Bench of the previous government. Nevertheless I do not believe that the argument he proposes with regard to the Ministry of Defence and the Department of Social Security holds as much water as he thinks. At the end of the day Cabinet decisions and government decisions are taken. I suspect that the Government adopt exactly the same stance as did the government of which the noble Lord, Lord Mackay, was a member, and for exactly the same reasons. Therefore I expect Members of the Committee on the Benches opposite to act tonight as they did when they were in government and support the Government on this issue.

Lord Elton: I did not intend to speak but I was astonished to hear what the noble Lord, Lord Davies of Coity, has just said. It is only noble Lords on the Front Bench who have any official capacity in this debate. The rest of us are free to do what we like. It is not the case that everyone who has held office must think that they have always been right and that if they were wrong they must still maintain that position. My noble friend has described a situation with which I am familiar. About a decade before the time of which my noble friend spoke I sat in that rather dreary office in Alexander Fleming House and faced the same problems. Interdepartmental squabbles are nothing whatever to do with this Chamber, or with the Front Bench opposite because the Front Bench opposite answers for the Government. As the noble Lord, Lord Davies of Coity, has rightly said, the issue we are discussing is one to be resolved in Cabinet. The function of Parliament is to control the executive, not to give it free rein. If it needs a steer, I should have thought that the Committee is in a good position to do so this afternoon.

Lord Stoddart of Swindon: Support for the amendment has been expressed on three sides of the Chamber, and, indeed, from this side. I lend my voice to that support. I should not want it to be thought that the Labour Benches were not sympathetic to the aims of the amendment. I know that many of my noble friends on these Benches are indeed sympathetic to those aims. I sincerely hope that we can achieve them. My noble friend was certainly in favour of this kind of amendment when we were in opposition. I feel sure that she has not changed her mind. Even if my noble friend cannot accept the amendment, will she give all sides of the Chamber, including these Benches, an assurance that before we conclude all stages of the Bill a provision can be inserted in the Bill, either by herself or by someone else, that will achieve the objective of the amendment of the noble Baroness, Lady Strange?

Baroness Hollis of Heigham: The proposed new clause raises an issue that was debated last year during the passage of the then Welfare Reform and Pensions Bill. As the Committee has noticed, it was not then--as it is now--a matter for the DSS, but for the MoD. At that time my noble friend Lady Symons explained that the Government have enormous sympathy for the widows who would achieve a lifetime award of a pension as proposed in the amendment. She sends her apologies to the Committee. As has been said, she is in Washington on government business and regrets--as I do, obviously--that the amendment is having to be discussed in her inevitable absence. This longstanding engagement is one that she cannot break. However, we are only at Committee stage, we still have the Report and Third Reading stages. As my noble friend will certainly be present at those later stages to discuss noble Lords' concerns and will perhaps be able to respond to them in greater detail than I can tonight--

Lord Astor of Hever: Does not the Minister accept that she is answering for the Government at this point?

Baroness Hollis of Heigham: Yes, but the Bill concerns DSS pensions and the pension we are now discussing is an MoD attributable war pension. Of course I speak on behalf of the Government. However, the whole push of the speech of the noble Lord, Lord Mackay, was that the department that has to be persuaded of the merits of the amendment is the MoD. I therefore expressed, perfectly properly, my regrets and those of my noble friend that she cannot be present this evening. I suggest that Members of the Committee may consider it prudent to put their arguments to my noble friend when she is present at Report or subsequent stages of the Bill. I note that two noble Lords wish to speak. I give way to either or both.

Lord Elton: I do not wish to be unpleasant or personal; I am speaking about offices, not people. The proceedings of the House were adjourned this afternoon because the Minister was not able to be in the Chamber when the Committee wished to proceed with business. For her to then argue that any decision on the business in hand should be deferred because another member of the Government--who shares that responsibility, but not the responsibility of the Dispatch Box--cannot be here to answer in person is beginning to make the House of Lords look as though it is dependent on the convenience of government Ministers in order to pursue its business. I am sure that is not the noble Baroness's intention. I repeat that there is nothing personal in this, but we have to defend the dignity of the House--and that is now in issue.

Lord Mackay of Ardbrecknish: I shall be a little gentler than my noble friend, who makes a valid point. If we are to be asked to wait until the noble Baroness, Lady Symons of Vernham Dean, can be here, either on Report or at Third Reading, can we have a guarantee that we shall hear, not that there is to be another review, but that she will come forward with an amendment that will do what the Committee wishes to be done?

Baroness Hollis of Heigham: Perhaps I may return to this point later. Let me carry on with what I was going to say and let us see whether it deals with the points raised.
	As I said, my noble friend explained last summer that the MoD is currently undertaking a review of the Armed Forces pension scheme. I understand that an announcement is due to be made during the summer. The review will include consultation with all parties with an interest in the pension arrangements for the Armed Forces. I am sure that those who speak for the War Widows Association will put their case eloquently and forcefully, as has been demonstrated today.
	The review of the Armed Forces pension scheme has to be wide ranging and comprehensive. There are many different pension schemes in the public and private sectors and we need to consider how the best elements of these schemes can be incorporated into providing a pension scheme that meets the needs of all servicemen and women. As the Committee will know, in many respects private sector schemes are nowadays very different from public sector schemes; they have different arrangements for widows who remarry and, to respond to the point made by my noble friend Lord Alli, they have different arrangements for trustees, for example, to allow named dependants--including same-sex partners--to inherit a widow's pension. So there are obviously those considerations. As I say, we need to see how the best of those schemes can be incorporated into building a pension scheme that meets the needs of all servicemen and women.
	In his remarks, the noble Lord, Lord Mackay, made two points in particular. First, he said that this was unfair to the widows of servicemen when compared to the pension sharing of divorced wives. It is true that, under pension sharing, pension rights are to be treated as property and that a divorced wife will keep her pension share, regardless of whether she remarries later. But she will not necessarily be better off. The widow whose husband dies as a result of service receives an attributable pension, which is paid at a higher rate than the normal Armed Forces pension as it includes an element of compensation. So it is more generous than a divorced wife would get from a share of her husband's occupational scheme. Secondly, a widow receives a pension from the time of her husband's death, whereas a divorcee would have to wait. Thirdly, of course, even when a widow remarries the pension that she would get for her children--which is again relatively generous, and rightly so--continues.

Lord Mackay of Ardbrecknish: Before the noble Baroness leaves that point, I do not think that she has put up a good argument. While of course a divorcee will have to wait until she reaches retirement age to receive the pension, she will still receive the pension even if she remarries. The lady whose husband is killed in action loses her pension for ever the moment she remarries--unless, of course, she is widowed for a second time. But she will lose it for ever as far as her marriage to the serviceman is concerned. Even though I accept that her pension starts immediately and is, rightly, far better than that of a divorcee, that does not alter the fact that a divorcee keeps the pension on second marriage.

Baroness Hollis of Heigham: Yes, but the widow, of course--as your Lordships expressed against the advice of the noble Lord on an earlier occasion--is able to regain it following, possibly, the end of a second marriage. That was a decision of your Lordships.
	The point I was making is that that is one of the reasons why the war widows' pension is more generous than the settlement of a divorced wife of a serviceman. It reflects the different circumstances in which she finds herself, including the fact that she loses her pension on remarriage. However, she keeps the pension for the children. I do not think we disagree on those facts.
	The second point of the noble Lord, Lord Mackay--from his experience as a former Minister for war pensions--challenged the notion of the costs involved. We know, for example, that if we were to ring-fence a figure it would be based on something like 2,500 war widows below the age of 60. Based on their historical remarriage rates--I am sorry to use such a cold phrase--the additional costs would be about £3 million per year, but buying back the superannuation liability in retrospection would cost some £400 million a year. The read-across to the public service--including the fire service, the police and so on, as the noble Lord suggested--would cost about £150 million a year. Again, if it were to be made retrospective, the cost would grow. In other words, the cost for the narrow group ring-fenced in this amendment is relatively modest, but I do not think that it would be right or proper to confine any such amendment to that very narrow group. Despite what the noble Lord, Lord Mackay, said, the read-across costs are quite significant.

Lord Mackay of Ardbrecknish: I am grateful to the noble Baroness. There is a point relating to the read-across which she has not addressed. She has made no attempt to argue the read-across on the pension being restored on second widowhood, as far as I know. If it has been ascertained, I should be interested to hear it. That is a major point. I urge caution on the noble Baroness. I remember the figures I used for restoration on second marriage, all cleverly obtained by the Treasury. The noble Baroness herself, in her usual very able way, rubbished my figures to such an extent that I went back and had them checked in my presence. Frankly, the figures were out of all proportion to the £40 million that restoration actually costs. So I do not, frankly, believe the figure of £400 million.

Baroness Hollis of Heigham: It is £40 million. The noble Lord is quite right. None the less, the read-across to the rest of the public sector is calculated to be £150 million. I think it was the figure that the noble Lord gave to the House when he was on these Benches. He has said nothing today to suggest that those figures are not correct.
	We believe that if we are making provision for one group of people, it is right that others should be considered; in other words, there is a wide Treasury interest as well as an MoD interest. The Armed Forces pension review is working with other pension providers to ensure that, where appropriate, the Government's approach to pension provision is fair and even-handed.
	The Committee has put its points strongly. Those points have been heard by the Government in this Chamber and in another place. I am asking the Committee to wait for a few more weeks until the review has been completed and my noble friend the Minister who answers for Defence in your Lordships' House--who is, unfortunately, absent today--is in a position to respond in the kind of detail that the House and the War Widows Association have a right to expect. As I said, we are at Committee stage now; we have a Report stage and a Third Reading to go. I ask my noble friend Lady Strange--I call her my noble friend because we have together, on many occasions, tried to do our best for war widows and for the War Widows Association--to withdraw her amendment. I shall ensure that the MoD receives the concerns of the Committee and that my noble friend is fully briefed should we wish to return to this at Report stage.
	I suggest that with a review to be published by the MoD only a matter of a few weeks away, which will then go out to consultation, it would not be appropriate for the Committee to pre-empt that review and that consultation exercise. As I say, that will come before your Lordships' House at the appropriate time. The Committee will be in a better position to make an informed decision as to how this matter should progress after my noble friend has returned and after the forthcoming review and the consultation that will follow it. In the light of that, I ask the noble Baroness to withdraw her amendment.

Lord Elton: Before the noble Baroness sits down, I shall do nothing to persuade the noble Baroness, Lady Strange, to stay her hand today. It would be easier for her to come to a conclusion if the Minister, who has held forth inducements to delay--including the expected return of her noble friend, a review, and a consultation on that review--could tell us what stage the Bill will have reached by the time the consultation is concluded so that we know what the Government are going to do. Will it be on Report or at Third Reading? If the Minister cannot answer "Yes" to either, I see no reason to wait at all.

Baroness Hollis of Heigham: If a review is to be published in the next few weeks--in June is my understanding--and with the possibility that the Bill will have concluded its stages in your Lordships' House by the end of July, is the noble Lord really suggesting that the consultation exercise, which involves full consultation with all the servicemen's organisations, the War Widows Association and possibly other organisations as well, should be compressed into the space of two, three or four weeks in order to meet that request? That would make a mockery of the consultation. The organisations out there, for which noble Lords have spoken today, have a right to be heard.

Lord Elton: I have made no such suggestion. Unless something very unusual happens, we will not prorogue before November. We have the whole of the spill-over for Third Reading. This is a Bill brought from the Commons. It has no further stages there except consideration of our amendments to it. I am suggesting nothing extraordinary or hasty but simply that we should know that the House's decision will not be deferred beyond the point at which the noble Baroness's arguments cease to have force.

Baroness Hollis of Heigham: It will be in your Lordships' hands as to when the Bill leaves your Lordships' House. I am saying that the review is due to be published in the next few weeks. Those are the words I have been given and I have no reason to believe that there has been any slippage on that. As a result, it will then go out to consultation. I cannot tell the noble Lord how long is envisaged for that consultation exercise. It is usually a minimum of three months, particularly over a summer period possibly when members of organisations may well be away. But it would not be unreasonable for your Lordships to have that information in mind. Clearly, in the light of what the noble Lord has said, it would be up to the MoD to try to expedite the consultation exercise. However, given that this is such an important matter, with such read-across effects to other public sector bodies, it would not be reasonable to compress that consultation in order to meet the timetable here today.
	Different stages of the Bill are due to be taken. If your Lordships are not happy with the review and the consultation exercise and the MoD and government response to it, there is ample opportunity for your Lordships to revisit the issue. But I would hope that when the review is published and goes out to consultation it will embody positions which your Lordships might feel address some of the concerns expressed today. As a result, your Lordships might wish, in an individual capacity or representing organisations, to put forward evidence to that effect. As a result, that would carry extra weight with the Government. That is the point I was making about timetables.

Lord Elton: The noble Baroness made the point that we would be able to return to the issue after those processes were completed. The point that I hope your Lordships have seized is that there will be no ability to return to it effectively if the Bill is already on the statute book. All I am asking the noble Baroness is whether the reasons she is offering us for delay are valid, because if the processes she has described are complete after the Bill is out of our hands, they are not relevant.

Baroness Hollis of Heigham: I am in a dilemma here, too. Your Lordships know perfectly well--certainly someone as experienced as the noble Lord, Lord Elton--that, if a review document is going out to consultation, there is usually agreement with the organisations concerned as to how long that consultation period will be, particularly when that consultation document is being issued over the summer. Given that, I really do not think that I can go beyond what I have already said to your Lordships.
	I wish to make one final remark. At the end of the day, I am not arguing about the merits or otherwise of the proposal. That argument has been well addressed and aired in previous discussions in your Lordships' House. What I am saying is that, with a review document due to come forth fairly quickly and with the consultation process following, it is not in my view appropriate for your Lordships to seek to prejudge the issue. Your Lordships are entirely free to do so, but it would seem to be wise to respect the nature of a consultation exercise, which, as I have said, I would expect to take place over the summer.

Lord Carter: Perhaps I may help the Committee on this point. I clearly do not wish to discuss from the Dispatch Box the timing of Bills but the fact is that there is a legal requirement for certain Bills before the House--for example, the Terrorism Bill--to receive their Royal Assent by the Summer Recess. With regard to other Bills, like this one, it would be desirable but not legally essential for them to receive Royal Assent by that time. We have not yet thought of a date for Report. By the time that date becomes available and is clearer, we shall know much more about the timetable of the consultation. So your Lordships will not lose anything by accepting what my noble friend has proposed.
	There will be a Report stage. When we reach the Report stage, noble Lords will know exactly the state of the consultation and the likely reporting date. If noble Lords then feel that that is too long, they can take the necessary action. If they are satisfied with that process, they might wish to deal with the matter in a different way on Report.

Lord Henley: As the Government Chief Whip has intervened, will he then go further and offer an assurance that, irrespective of the date of the Report stage, he will be able to delay the Third Reading until possibly November to allow us to see both the document and the results of the consultation promised by the noble Baroness, Lady Hollis?

Lord Carter: That was a good try! I see some noble Lords opposite whom we do not often see here, so I understand the Opposition Chief Whip's anxiety on this matter. Obviously, I cannot say that I can delay the Third Reading until November. I have said that we have to get the Committee stage, Report and Third Reading of certain Bills by the summer and that, by the time this Bill has a date for Report stage, noble Lords will be much better informed. We can inform noble Lords about the nature of the consultation and its timetable and they can then decide at the Report stage what to do with the proposal from the noble Baroness, Lady Strange.

Baroness Park of Monmouth: Perhaps I may suggest to the Minister that there is no reason why the Committee should not express its view--incidentally, I have spoken before on this subject: I am not new to it--and let that be taken into consideration when the consultation comes along. We are surely part of that consultation. The amendment is a means of expressing our view. Moreover, we have expressed it on several earlier occasions. I shall be very interested to know what new factor might emerge, other than money and the availability or lack of it, that could change that. As far as I understand it, the Government's difficulty is very much more with the extension of the decision to a number of other deserving parts of society than with the actual issue of the MoD. That is why I think it would be wrong to forgo our chance now of expressing our view on this very limited, precise matter. We have gone over it many times before. I cannot see why we should not express our view now and have it taken into consideration in the consultation.

Baroness Strange: I do not know what to say or what to do. So many noble Lords have spoken and I thank them all. I should like to thank my noble friend Lady Fookes, who is also the vice-president of the War Widows Association, my noble friend Lord Astor of Hever, who made a moving speech, my noble and gallant friend Lord Craig of Radley, my noble kinsman Lord Russell, my noble friend Lord Alli, my noble friend and former enemy Lord Mackay of Ardbrecknish, my noble friend Lord Renton, my noble friend Lady Carnegy, my noble friend Lord Elton, my noble friend Lady Park of Monmouth, my noble friend Lord Stoddart of Swindon and, particularly, my noble friend Lady Hollis, who has been really sweet and has listened to absolutely everything.
	I am very sorry to have to do this to her--I really am. Perhaps even now, if it could see the amount of support that there is for it, the Ministry of Defence might consider moving this small item forward in a separate agenda. I do not know that I shall even allow my noble friend the Chief Whip to have another bite at the cherry. He will just have to gobble me up now. I shall cross my fingers, shut my eyes and fling myself onto the patchwork, fibreglass cow. I wish to test the opinion of the Committee.

On Question, Whether the said amendment (No. 175) shall be agreed to?
	Their Lordships divided: Contents, 143; Not-Contents, 117.

Resolved in the affirmative, and amendment agreed to accordingly.
	Clause 61 [Loss of benefit for breach of community order]:
	[Amendment No. 176 had been withdrawn from the Marshalled List.]
	On Question, Whether Clause 61 shall stand part of the Bill?

Lord Windlesham: In speaking to the question of whether Clause 61 should stand part of the Bill, I will speak also to the subsequent Motions on whether Clauses 62, 63, 64 and 65 should stand part of the Bill.
	These clauses are controversial. If they are enacted, they will authorise loss of benefit for an alleged breach of a community order. The Government's proposals were strongly criticised on all sides of the House at Second Reading. Since then, as the full significance of what is proposed has become apparent, the opposition has intensified.
	So what is so unusual and objectionable about these clauses? Put simply, it is that the procedure put forward by the Government confuses administrative practice--that is, the conditions that apply to entitlement to, or disqualification from, social security benefit--with the sentencing of offenders. Entitlement to benefit is based on need. Needs do not change when conditions of community orders are not observed.
	A probation order or community service order is--there should be no mistake about it--a non-custodial penalty. It is at the discretion of the court to decide, once guilt has been established, whether an offender convicted of a less serious offence is sentenced to a term of imprisonment, or receives a fine, or whether that person is sentenced to a community penalty. If sentenced to a community penalty, the offender will be subject to supervision by a probation officer who has the responsibility to see that the sentence of the court is properly carried out. If, for example, the offender fails to report regularly, or does not carry out allocated tasks of community service, after one warning he or she will be at risk of being taken back to the court. Enforcement of community orders by the Probation Service has recently been strengthened. A great deal of work has been done to that end. Two independent surveys have indicated the scale of the improvement that has taken place over the past 12 months. Just a few weeks ago, the Minister of State at the Home Office, Paul Boateng, congratulated the Association of Chief Officers of Probation on the improvements that had been made in enforcement by the service.
	The crucial point to keep in mind is that the decision on whether there has been a breach is taken not by the probation officer; it is taken by the court after a judicial hearing. The court may be satisfied that there is a reasonable explanation, and may continue the order. It may, and in many cases does, agree to the withdrawal of the application by the Probation Service because new information has come to light since the original notification of breach. It may revoke the order and re-sentence either to custody or to a further non-custodial penalty.
	I rehearse the sequence of events, which will be familiar to some but not all Members of the Committee, because it is into this well-established legal order, statutory and evolutionary, that the Department of Social Security has blundered. One is bound to ask why, unlike other proposals for the reorganisation of the Probation Service which are contained in the Criminal Justice and Court Services Bill currently before Parliament, there has been no prior public consultation or discussion with the services affected. The proposal came as a complete surprise.
	Loss of benefit was first announced by the Prime Minister when introducing the Government's legislative programme in another place last November. It was part of a package of six punishment-related items included in a "tough on crime" section in the Queen's Speech. Since then, every public service that will be directly affected in its implementation has gone on record as deploring the intention to withdraw or reduce social security payments as soon as an alleged--I repeat, alleged--breach of a community order is reported to a local benefit office by the Probation Service.
	The highly responsible Association of Chief Officers of Probation has been joined by the National Association of Probation Officers, the Magistrates' Association, the Justices' Clerks' Society, and the Commission for Racial Equality in a rare display of unanimity. If this is a listening Government, surely Ministers have an obligation to listen, rather than to dig themselves further into what is an indefensible position.
	The Penal Affairs Consortium, representing no fewer than 41 organisations concerned with the penal system, goes further than the injustice of what is proposed and describes the measure as,
	"retrograde, counter-productive and bound to increase crime".
	Such a perverse outcome is a real possibility if offenders who are attempting to establish themselves in a local community suddenly find that they have no money, or that their income, which is already set at a low level, is reduced. We should remind ourselves that many are drug or alcohol misusers for whom the court has decided that a period under supervision offers the best hope of overcoming their addiction, so reducing the prospect of further offending in future. For them, as for many others, whether caused by impoverishment, recklessness or resentment, reoffending is often impulsive and irrational.
	Since deterrence--which it seems the Government had in mind in introducing the proposal--depends on rational calculation, it will be at its least effective in such circumstances. The idea of sending messages by way of legislation is simply absurd. It is impossible to avoid the conclusion that the full implications of the proposal were not properly thought out before it was announced. Since then, the Government seem to have had difficulty in comprehending why the clauses are wrong in principle and likely to prove counter-productive in practice.
	The intention of my noble friends, if I may so describe them in different parts of the Committee, is to provide an opportunity for the Government to hear at first hand from those who have experience of the workings of the penal system just why these clauses are so objectionable, and to give them an opportunity to reconsider.

Baroness Kennedy of The Shaws: I have put my name to a number of amendments because of my profound concerns about these proposals. I agree with the noble Lord, Lord Windlesham, that these provisions are an attack on the poor. They create a discriminatory punishment which applies only to the poorest in our society: those on benefit. This punishment will not apply to the drug-taking sons of the privileged or the shoplifting wives of the well-to-do who are in breach of community orders. It is a double punishment, and the inherent unfairness of it is wrong in principle. It is an extraordinary departure. In addition to the courts, a department of state will now mete out punishment. The Secretary of State, Mr Alistair Darling, is to dress himself up in the clothes of the Lord Chancellor.
	I was worried because perhaps this was the new big idea of government. In a moment of reverie, I imagined the development of that idea into other areas. Perhaps next month child benefit will be stopped if children are taken on holiday in term time, or tax relief will be reduced if one's dog fouls the pavement. This matter should concern the Committee. The proposal represents an unacceptable cross-over between different arms of government. The "Big Brother" quality of this thinking should create alarm and despondency. People should not be duped into thinking that it is a reasonable response to anti-social behaviour. The proposals are an affront to human rights not only because they are discriminatory but because they punish in advance of conviction. They breach Articles 6, 7 and 14 of the European Convention on Human Rights and the Human Rights Act which is to come into force in the autumn. I believe that in particular cases other articles will also be violated; for example, when the punishment impacts on the children of offenders.
	On the previous occasion when the Committee debated these provisions the Minister disagreed with me when I said that women and children would be affected. I took the opportunity to discover whether my fears about the effect on women and children were unfounded. Eleven per cent of those on community sentences are women. It is believed by the agencies involved that two-thirds of those women have children. For example, a single parent with one child would face a reduction in benefit from £90 to £70 a week, which would be a minimal benefit. I ask the Committee to consider what effect that would have on the ability of an individual to cope. Last but not least, this measure is a sure-fire way to increase crime. It takes little imagination to envisage what people may do when they lose a significant proportion of their income. This proposal will increase the temptation to steal, burgle, solicit for prostitution or sell drugs--all the matters about which we are so concerned.
	I am sure that initially many members of the public would regard this as a sensible proposal to prevent people who had been placed on probation or other community service orders from cocking a snook at the system and failing to fulfil their obligations. However, the proper way to deal with breaches of court orders is to bring people back before the courts. In that way a proper judgment can be made as to whether a breach has occurred. In my experience--I have spent 25 years in the courts--often poor people who are placed on probation have a multiplicity of social problems.
	One of the purposes of a community order is rehabilitation and to bring a degree of order into lives which sometimes have become chaotic. The purpose is to help people who are trying to kick a drug habit or alcoholism to cope so that eventually they can return to work or to training and play a part in society. But that takes time, and in the early stages people can find it very challenging. To get one's children up for school in such circumstances can be hard. One may miss an appointment because one has been up all night with a child who is sick or suffers nightmares; or one may have to deal with a neighbour who has overdosed, or one may forget to set the alarm clock. Such instances taken together may result in the probation officer being obliged to refer the case back to the courts. A second failure to attend is now a ground on which the Probation Service must report back to the court.
	Under this proposal there is a duty to inform the Benefits Agency. Sometimes the court finds that there is a reasonable excuse; if not, the offender is punished. That is the right way to deal with it because the court is the proper arbiter. This proposal is not in keeping with the values of a Labour government. Our principles are based on abiding values, of which I am proud. Those values are not about handouts, but about looking out for the poor and giving them ways to throw off their impoverishment, crushing discrimination wherever we see it rather than fostering it, creating equality before the law, not differentials and double punishment, and protecting citizens from unfair treatment by the state. It is not for us to become the state and to invent exquisite new ways to punish. When it comes to civil liberties, there is no third way.

Lord Carlisle of Bucklow: One of the advantages of Committee stage when one has not taken part in the Second Reading is that one has had an opportunity to read the speeches made on that occasion. All I can say is that, having read the speeches of my noble friend Lord Windlesham, the right reverend Prelate the Bishop of Lincoln, and the noble Baroness, Lady Kennedy of The Shaws, I agree with every word that each has said. To repeat their words would be tautologous and, therefore, I intend to be brief.
	I believe that what is proposed in these clauses is wrong in principle and that it would be wholly counter-productive in practice. First, it is wrong in principle because the withholding of benefits is used as a non-judicial means to punish and attempt to enforce the orders of the courts. Secondly, it is wrong in principle because it clearly involves a double penalty. In those cases where a breach is proved, the withdrawal or reduction of benefit is a further punishment on top of the order of the court. Thirdly, it is wrong in principle because it discriminates between those who are out of work as against those who are in work as to the form of penalty that they face. Fourthly, to impose a reduction of benefit on an allegation of breach of an order rather than on a finding of a breach is a principle that I regard as both novel and unacceptable.
	As far as concerns practicality, I believe that the measure will be wholly counter-productive. The fact is that most of those who are on probation or subject to community service orders have a history of thieving and stealing of various kinds. To impose greater poverty on the poorest at that time by this measure will substantially increase the temptation for them to commit further offences. Undoubtedly many will fall to that temptation and commit further offences. Therefore, the effect in practice will be to increase rather than reduce the amount of crime.
	I strongly believe that those who are in breach of a condition of a probation order, particularly a community service order, should be dealt with severely by the courts. Community service is accepted and intended to be an alternative to imprisonment, and it is right that those who breach a community service order should realise that they stand in real jeopardy of losing their liberty.
	I understand that 21 per cent of those who were brought back before the courts in the past year for breach of community service went to prison. It would not worry me if that figure were far higher. I believe that they should be warned clearly of the effect. But to attempt to punish them in the way that the Bill provides is, I believe, wrong in principle and will fail in practice.

Earl Russell: If I do not repeat what has been said in the three previous speeches, it is only because I am not addicted to the gilding of lilies.
	The penal affairs case against the clause, and the attendant comet of other clauses which form its tail, is so overwhelming that, having listened to the speeches made already, any sensible government would withdraw the clause. But there is also a social security aspect. As the only social security specialist with his name to the amendment, I think that it would make sense if I concentrate on that part of the argument.
	It seems as clear from the social security perspective as from the penal perspective that the effect of the proposal would be to increase crime. In the words of the Penal Affairs Consortium, pushing poor people into even greater poverty must increase the temptation to steal, burgle, rob, shoplift, solicit or sell drugs. One might add that it is particularly likely to do that if those people, because they are a pre-selected sample, already have experience of crime. If we are on our uppers, we tend to rely on those skills we know. If we are criminals, the skills we know are those of crime, and the temptation to use them may be irresistible.
	The Minister may tell me that that is a rebuttable presumption. If the noble Baroness tells me that, I shall not argue with her. But I think she knows that she is in no position to rebut it because she and her predecessors have failed conspicuously to collect the evidence upon which it might be rebutted. We have no significant body of evidence on how those who are disentitled to benefit make a living. The Minister knows that I have questioned her and her predecessors on this issue for quite a long time and have not received answers. If it were not true that the measure will increase crime, the Minister is in no position to make the case.
	It is a slight exaggeration to say that the noble Baroness knows of no evidence. In a debate immediately before the Easter Recess in which my noble friend Lord Addington spoke, the Minister recommended one piece of government research: the DfEE Research Report 86 on the effect of sanctions on jobseeker's allowance. In that report I find one and a quarter pages on the effect of sanctions. It states that people experienced considerable hardship, but those who were single experienced slightly greater hardship. Doubtless the Minister will make much of hardship payments. I invite her, not for the first time, to explain why the Government believe that single people by definition cannot be in hardship. I have never understood that argument and I have never heard a coherent explanation.
	The report quotes one person who had been sanctioned saying that he,
	"just scraped through, but it wasn't easy at all".
	It does not say how those people make a living, what sources of income were available to them, whether they were legally or illegally obtained, how far short of benefit levels they were, and what things they had to forgo in order to live. Until we know those factors we are in no position to judge the effects of benefit sanctions. Since that ignorance is the result of deliberate inaction by the Department of Social Security, I think that I am entitled to describe it as culpable negligence. Before the proposal is reintroduced, that culpable negligence must be put right.
	Noble Lords have touched on the fact that the benefit is withdrawn before a hearing. I shall not soon forget the speeches made by the Minister herself against that proposal when it was introduced in the Jobseekers Act. They were some of the best speeches I have ever heard in Parliament; and I still agree with every word of them. The noble Baroness will point out that the benefit forgone can be withdrawn if the penalty were found to be mistakenly imposed. But you cannot hang your stomach on skyhooks. If your benefit is withdrawn for several weeks, you will be unable to postpone eating until you get the benefit back. You have to do something in the meantime. Some of the people in that position will adopt what the Children's Society described as risky survival strategies: theft, sleeping rough, begging, drug pushing--crime of various kinds. I am advised that drug couriers can make £50 for one single trip. That must look very tempting if you do not know where your next meal is coming from. "Lead us not into temptation" is advice which might be heeded by legislators as well as others.
	I am sure the Minister will say that this is not a penalty. That does not sound particularly convincing. I am reminded of the story of Kaiser Wilhelm (as he subsequently became) at the age of five being spanked by his nurse. The nurse said solemnly, "This hurts me as much as it hurts you", to which the Kaiser replied, "Oh, and in the same place?". The argument that it is not a punishment is just about as convincing as that.
	However, for the sake of fair play I take the argument on the premises on which the DSS has chosen to advance it. I take it on the letter from Mr Alistair Darling in The Times of 11th May replying to letters from the noble Lord, Lord Windlesham, and myself. Mr Darling said that the proposal is based on the clear principle that rights to benefits are conditional on an individual fulfilling their responsibilities to society. As the noble Baroness, Lady Kennedy of The Shaws, pointed out, that is dangerously open-ended. I am not clear what might be done in future under it.
	On conditions to benefits, we need to make some distinctions. At Second Reading, the Minister said that conditions to benefits have been imposed before. Yes, they have, but we need to consider under what headings. First, in means-tested benefits there is inevitably a condition about the sufficiency of means. None of us argues about that. Secondly, there is a condition about being available for work. There is plenty of room for argument on both sides about that. On the one hand, it is a valid principle that the need can be seen, like intentional homelessness, as self-inflicted if the person is not seriously trying to get out of it. On the other hand, it is an equally valid principle that starvation is a punishment which should not be inflicted by authority in civilised society. We on these Benches have debated the issue at considerable length among ourselves on various occasions. The position we take is that since both those principles are valid in the moral plain we should judge between them according to the effects that disentitlement has. We should judge by the consequences if ever we can find what those are. Meanwhile the benefit claimant should be given the benefit of the doubt.
	However, with Mr Darling's letter we are in an altogether different line of country. There is nothing in this new condition to benefit about whether the person is attempting to get work. It is not even a condition of a probation order that you should actively seek work. The condition is based simply on the fact that the Secretary of State happens to disapprove of the activity in question. Once you get into disentitlement to benefit because the Secretary of State disapproves of the activity in question, you are in very dangerous country. Secretaries of State are addicted to disapproval; it is part of their professional apparatus. Once we get that far, surely we are back in the territory of the distinction between the deserving and the undeserving poor. I heard the Minister powerfully and movingly denounce that many times when she was in opposition.
	The idea that some of the poor are undeserving is always tempting to those who have property. I do not believe that we should encourage it, especially when by doing so we are wandering into an area where we confuse the business of two ministries. Late last weekend, I happened purely by chance to be looking at the 13th report of the Social Security Advisory Committee. It was considering a quite different measure, but it stated a general principle which is worth thought:
	"Caution is required to ensure that inter-departmental policies are compatible before making receipt of a social security benefit dependent upon satisfying a non-money related condition. Care is also needed to ensure that the introduction of additional requirements does not make the administration of social security benefits unnecessarily complex and correspondingly expensive".
	There are problems here. If people lose their benefits, what will happen to their repayments of Social Fund loans? I know that they keep housing benefit, but what will happen if they are paying some of their rent out of income support? What will happen to instalment payments to the utility companies? What will happen to the £5 which they are required to pay as child maintenance if they are in receipt of income support?
	If that goes, the Minister must abandon the position she took about the absolute priority of money for child maintenance. If it does not go, she must abandon the insistence she then made that she cannot imagine any situation in which people are unable to pay what they were assessed for under the Child Support Act.
	The Government are not so much shooting themselves in the foot as shooting themselves in the toes one by one. It is a wistful procedure. We should stick to the basic simple principle that benefits are not given for being good; they are given for being in need.

Viscount Tenby: I rise to speak briefly in support of the amendment tabled by the noble Lord, Lord Windlesham, and others. I say "briefly" advisedly since the principal objections to the measure were admirably covered by the noble Lord both at Second Reading and earlier today. The logic and common sense of what he has said has been strongly reinforced from all sides of the Committee.
	I shall not dwell on what the measure will do to the disadvantaged because it was much more ably expressed by the noble Baroness, Lady Kennedy, and the noble Earl, Lord Russell. However, like others, I have received representations from the Probation Service at all levels and from the Penal Affairs Consortium. In order to complement those, I have been in touch with the Magistrates' Association. Here I must declare an interest as a member of that association and as a magistrate on the supplementary list. I have also been in touch with the Justices' Clerks' Society of England and Wales. In every single case, grave reservations were expressed about this extremely dubious initiative. Their concerns concentrated in the main on the leapfrogging over the due process of law; potential double punishment for the same offence for some but not for others; the implications for this country under forthcoming human rights obligations this autumn--and that despite the Minister's assurances at Second Reading--and, perhaps most importantly, the effect that it will have on the Probation Service and its delicate relationship with offenders. I could easily enlarge on that list, but the clock ticks on and the Committee stage has been long.
	I have some sympathy for the Minister. She has already been under fire today under MoD rules of engagement. She is now being charged with an unauthorised poaching expedition into a territory of the law. Like many other Members of the Committee--and these are not weasel words--I have great respect for the Minister and her passionate promotion for what she believe in, but I hope that in this case she will allow me to say that it is a pretty rum do all round! It is difficult to see why the many minefields around such a proposal were not spotted well in advance. For example, unused though I am to the workings of the Whitehall machine--and I say that almost thankfully--I find it odd in the extreme that one great department of state, the Home Office, has allowed itself to be "cut up" by another, the Department of Social Security.
	One simply cannot, and certainly should not, mix up the law and the executive in this way and confer powers on the executive ahead of trial. Unless my appreciation of English constitutional history is seriously flawed, that is a fundamental fact about the constitution of this country. Accordingly, I most warmly urge the Minister to think again, having heard the compelling arguments advanced tonight, and to give us all grounds for hope. Once that subtle and precious link has been broken, the first step towards possibly greater infelicities in the future will have been taken and that is a serious matter.

Lord Davies of Coity: Someone would have to be totally insensitive not to be moved and to have sympathies with the arguments expressed today. However, some of the expressions were emotive and perhaps went further than necessary. Furthermore, there was a measure of unfairness as regards the proposals put forward by the Government.
	We must recognise that law and order is becoming an increasingly major problem. The observance of it is undoubtedly worsening; crime is increasing; and prisons are overcrowded. We know that in large measure community service orders are not working. We have heard comments about a penalty for the poor. The vast majority of poor people on benefit are not offenders. Certainly, the vast majority of people on benefit, poor or otherwise, are not offenders. In this provision, we are talking about people who are offenders.
	I understood the noble Earl, Lord Russell, to say that benefit is for need and I understand that. However, we also know that from time to time there has been fairly widespread benefit fraud. Whether that is committed by people who offend in another area of crime perhaps cannot be totally quantified, but the Government want to see people subject to community service orders fulfilling their responsibilities. If they do not, they place at risk their entitlement to benefit. It is one measure in the armoury of provisions in our legal system; for example, fines, community service orders, conditional discharges or imprisonment. The last thing I would want to see is the abandonment of community service orders because we would then have to return to the issue of imprisonment.
	It seems to me that this provision will not be used very easily; it will be used to try to bring about a greater degree of observance of a penalty that has been imposed by a court. If it succeeds in doing that, then of course the benefit will not be removed. I believe that this is the way in which the Government want to approach the matter. There may well be amendments to be made to the provision; nevertheless, I believe that there has been a measure of unfairness in the way that it has been described this afternoon.

Baroness Carnegy of Lour: I remind Members of the Committee that we are legislating for Scotland as well as for the rest of the United Kingdom. I believe that the noble Lord's defence of what the Government are doing may be echoed somewhere in Scotland, but I have not yet heard it. What I have heard is very much more the line put forward by the noble Baroness, Lady Kennedy of The Shaws.
	I wish to ask the Minister one or two questions about the way in which Clause 61 in particular will operate in Scotland because I do not believe that anomalies make it any more acceptable. First, as I read the Bill, a JP will report to the Secretary of State that an offender is not carrying out a community service order properly. As Members of the Committee know, a JP in Scotland is not the same as a magistrate in England and Wales. It is the view of the Law Society of Scotland, and it is certainly my view, that the sheriff should perform that function. It is a grave matter to remove someone's benefit before it is proved that the order is being broken and for it to be done by a Scots JP. That is no reflection on JPs, but it should be done at the sheriff's court. I should be grateful if the noble Baroness would say whether that change is under consideration.
	Secondly, I want to ask what happens if the noble Baroness, Lady Kennedy, is right and Clause 61 becomes law in Scotland and is found in a Scottish court to be in contravention of the convention on human rights. As I understand it, if a Bill has been passed by the Scots Parliament, it can be struck down by a Scottish judge in a Scottish court. However, this will be a UK Bill. I should like to know what happens if a Scottish judge finds that it is in contravention of human rights. That could happen at any time once the Bill becomes law because the convention on human rights is already incorporated in Scots law. There may be no difference. However, I should like to know the answer to that question. Certainly, I believe that the Committee needs to know whether the Bill is to be treated differently in the Scottish courts.
	My final question is why there have been no pilot schemes in Scotland. The social work system in Scotland is very different from the probation system in England and Wales.

Baroness Hollis of Heigham: Perhaps I may help the noble Baroness on that point. Pilot schemes are proposed in the Bill. I certainly take the point that perhaps one of them should be exercised in Scotland. However, the noble Baroness is asking us to anticipate what has not yet happened.

Baroness Carnegy of Lour: I thank the noble Baroness and I apologise for my mistake. However, the Bill states quite clearly that there will be pilot schemes in England and Wales but not in Scotland. I should like to know whether that has anything to do with the fact that, under the Bill, one benefit which the Government propose that it should be possible to remove from an offender is the training allowance. The whole area relating to training is a matter that has been devolved to Scotland. The Bill has been altered to allow for that. I believe that Clause 61 is probably absolutely accurate. However, I wondered whether that was one reason why it was proposed not to have pilot schemes in Scotland. If it is not, then it seems to me absolutely essential that there should be pilot schemes there, and I hope that the noble Baroness will be able to answer that point.

Lord Dholakia: I welcome the proposal of the noble Lord, Lord Windlesham, and other noble Lords to oppose the clause. Like the noble Lord, Lord Carlisle of Bucklow, I also concur with almost everything that was said during Second Reading of the Bill.
	Perhaps I may take just one thread of the arguments that have been advanced. Ethnic minorities are twice as likely as their white counterparts to be unemployed. In some areas, the proportion would be even higher. Sentencing research has already demonstrated clearly how the criminal justice system works against the interests of the minority community. This is not the place to elaborate on such researches. However, perhaps I may draw the attention of the Committee to the research conducted by Roger Hood of the Centre for Criminological Research at Oxford, which bears out what I have said.
	In this country, between 15 per cent and 18 per cent of the prison population in male prisons is black and up to one in four women in British prisons is black. Why do I say that? I do so because the Commission for Racial Equality is seriously concerned about the implication that the proposal to withdraw benefits will have to the disadvantage of ethnic minorities. If they are serving a community sentence, they are more likely to be in receipt of benefits than are their white counterparts. The commission is concerned also that the withdrawal of benefits will follow an alleged but not proven breach.
	The commission wrote to the Minister, Alistair Darling MP, about its concern, particularly in relation to the aims of the Race Relations (Amendment) Bill, about which we had a substantial discussion in this House, and the aim of the amendment approved by the Government. The Bill extends the Race Relations Act 1976 to those functions of public authorities that currently are not covered under the Bill. A policy which in its application operates to the disadvantage of a particular racial group who are proportionately less able to comply with the conditions or requirements of that policy would be unlawful unless it could be justified. I ask the Minister to consider whether justification for the proposed measure outweighs its likely disproportionate impact on ethnic minorities.
	I was interested to hear the noble Lord, Lord Davies of Coity, talk about the prison population. I had put a Question to the Minister--to which I have received a reply only today (I hope that it will be printed in today's Hansard)--about the impact of community sentences and the breach of those sentences. I asked the Minister what is the estimated likely increase in the number of people imprisoned each year and the average daily prison population as a result not of this particular clause but of Clause 46 of the Criminal Justice and Court Services Bill, which concerns the breach of community orders, warnings and punishment. The Minister replied:
	"We expect that the new proposals will be effective in persuading offenders to comply with their community sentences. In the short term, it is possible that there will be an increase in the numbers imprisoned. It is difficult to make firm estimates of the numbers involved, but if the new statutory warning scheme is ignored by half of those offenders who currently fail to comply without good reason on one or more occasions, some 25,000 additional offenders could be imprisoned resulting in an increase in the average daily prison population of about 1,900".
	That is the impact on the prison population of breaches of community service orders, either directly or indirectly. I ask one question. What is the Labour Party's estimate of a reasonable prison population in this country? We are already at the point of competing with Turkey. How low do we have to sink?

Baroness Stern: I, too, support the noble Lord, Lord Windlesham. I do not wish to detain the Committee or the noble Baroness long. The arguments have already been put very convincingly, but I should like to add two points. I have spent many years of my life working with the people with whom this clause is concerned; that is, people in all kinds of trouble. Often their trouble with the law was the least of their worries.
	All the research from the Home Office and from the Government's admirable Social Exclusion Unit bears out this experience. Many of the people we are talking about are struggling. There is one image of them as violent, offensive, thuggish and yobbish: many epithets can be found about them in the pages of any newspaper. There is another side that those who work with offenders, especially younger offenders, see often. The 19 year-old who does not look his age and who comes to a project, a day centre or to see his probation officer on a Monday morning full of misery. What sort of weekend has he had? He has tried to protect his mother from being beaten by his father. He has tried to look after the three younger children and feed them. He has suffered more than usual from the headaches he gets but he does not have a GP and the doctors on the estate where he lives are not very sympathetic to people like him.
	According to Home Office Research Study 167, Offenders on Probation, nearly half of the people subject to probation and community penalties said they suffered from a long-term illness compared to 13 per cent in the general population. That is the background of many of the people subject to community penalties and that case could be multiplied many thousands of times. These are the people who will be subject to this provision. They are already very poor.
	It may be said that these are all excuses and that there are no excuses for crime. These are not excuses but explanations of why this measure is grossly inappropriate. It will have another effect. When dispensing justice, one has to be just.
	As the noble and learned Lord, Lord Woolf, said in his famous and sadly neglected 1991 report on the prison system:
	"There must ... be justice in our prisons. The system of justice which has put a person in prison cannot end at the prison doors. It must accompany the prisoner into the prison".
	Nor must it end once the community sentence has been passed. The aim of the justice system is to get offenders to play by the rules; to respect the law; to understand justice and injustice; and to stop treating other people unjustly.
	This provision is clearly unjust. If so many noble Lords think it is unjust, so will offenders subject to community orders. Those in work will continue to receive money. Those without work will be deprived of benefit before a hearing. This measure makes the task of those working to get offenders back into society very much more difficult. It is desperately hard work--painstaking work for which too little credit is given. This measure will make their work even harder and the outcome will be one that nobody wants: fewer people helped into law-abiding lives, more social exclusion and more crime.

Baroness Massey of Darwen: There was reference at Second Reading to punishment fitting the crime; to the quality of mercy; and other more classical references from the noble Earl, Lord Russell. We have heard today a great deal of eloquence about community sentencing and benefit entitlements. My noble friend Lady Kennedy of the Shaws spoke very emotively and passionately. However, she does not speak for or represent the vast majority of Labour Back-Benchers.
	I want to make a few simple points underlined by the commitment in the Bill to evaluate the system of community sentences before rolling the scheme out. The points I make are about deterrents, choice, rights and responsibilities and setting examples.
	Members of the Committee are aware that community sentences are given to and indeed chosen by offenders whose crimes are not so serious that prison is the only appropriate measure. Community service orders, probation orders and combination orders impose sanctions through some restriction of liberty for offending behaviour and making reparation for the community; for example, by performing unpaid work. In many cases, successful completion of community sentences improves the opportunities of employment for the offender. Completing a community sentence requires self-discipline in attending appointments with the Probation Service and others and turning up for work on a community service placement.
	I, too, am a supporter of civil liberties of many kinds. I do not believe in punishment for punishment's sake. I believe in justice and playing by the rules. I believe that people, particularly young people referred to by the noble Baroness, Lady Stern, need to be provided with information and education to make choices in their lives. I believe that they also need frameworks and boundaries set by families, society and ultimately themselves. I believe it does no one any good, in fact it might do harm, to encourage choice, in this case choice of a community sentence, to set frameworks and then not sanction a breach of commitment. What is that saying to the offender? What is it saying to those who might offend? What is it saying to society in general?
	We have now introduced citizenship education in our schools as part of the curriculum. It would be a travesty not to advocate and set examples of responsibilities as well as rights. Surely we should be saying loudly and clearly to our young people that civil liberties also carry civic duties and that offending should carry sanctions, not only for the sake of society but of the offender. There is nothing wrong with disapproval sometimes.
	I understand that around 130,000 community sentences are handed down each year in England and Wales. In 30,000 cases a year, offenders have to be referred back to court because they have not complied with their sentences. This situation surely calls for action.
	The Bill contains powers to withdraw selected benefits from offenders who fail to comply with community sentences. I will not go into detail; that is well known. Your Lordships are also aware that the pilot scheme will permit hardship payments, even if the jobseeker's allowance and the training allowance are withdrawn, but only the element of selected training allowances, which equates with the participant's underlying jobseeker's allowance, will be withdrawn. Any additional premium, top-up payment or payment of expenses will remain payable subject to continued participation in the scheme. The allowances selected will include those payable to participants in work-based learning for adults and the New Deal for young people. Housing benefit entitlements will not be affected.
	This is surely about deterring people from breaching a contract they make with the state and making it clear that breach of contract will result in sanctions. Yes, it does send messages. Surely, it is fair that benefit systems should be seen to be applied to those who merit them and not to people who choose--I emphasise the word again--to fail to comply with agreed rules. There are conditions applicable to most aspects of life including good citizenship. We all have to learn the conditions and learn obligations to society. I believe that there are key principles at stake here, principles of being fair and being seen to be fair. I do not want to get into the draconian views of welfare and benefit sometimes voiced in the "vox pop" interviews. I strongly support welfare for those who deserve it and who have an entitlement to it. I also believe that people can learn and should learn to respect a system of rights and responsibilities. We must encourage them to do so. This is why I reject the amendment.

The Lord Bishop of Hereford: The right reverend Prelate the Bishop of Lincoln is very sorry indeed that he is not able to be here. His name is associated with these amendments. He has been called back to the diocese on urgent business. I want to express my agreement with this proposal and my support for it. I agree completely with what has been said by many Members of the Committee--the noble Lord, Lord Windlesham, the noble Earl, Lord Russell and the noble Baroness, Lady Kennedy of The Shaws. Breaching a community service order is a very serious matter. It is not something which can be overlooked and it is not something which is trivial. But what the Government are proposing is an extremely blunt and immoral instrument with which to deal with that particular alleged offence.
	It is quite right that if someone is alleged to have breached a community service order, he should go back to the courts as soon as possible. It is for the courts to establish whether there is a breach. The circumstances of each case must be established. Those cases will be extremely different, from person to person. What is the proper course of action for each of the 65 per cent of those under probation supervision who are on benefits and who would be punished by this proposal?
	I do not want to reiterate the arguments which have been set so eloquently before the Committee, but I want to express my support for the Motion and I apologise for the absence of the right reverend Prelate the Bishop of Lincoln.

Lord Elton: Perhaps I may respond briefly to the intervention of the noble Baroness, Lady Massey. She has addressed the practicalities of this debate in a manner which is very attractive to a large number of people outside this Chamber and to some Members on all sides of the Committee. Therefore, in turn, it needs to be addressed.
	We are debating two matters: principle and practice. The case about principle, which my noble friend Lord Windlesham and others have advanced, is unanswerable in the form in which it has been put. Sometimes practicalities argue against principle. One can bend principle because practicalities make it difficult to enforce or unreliable in effect.
	But I do not believe that that is so now. Many people, including the Association of Chief Officers of Probation, have adduced the way in which those provisions will work. The noble Baroness said that there must be fairness; that people expect punishment to be fair; that if you breach the order, you should be punished. My noble friend did not suggest that that should not be the case. He has merely said that it should be done by the courts; that these orders are an alternative to imprisonment; and that those who are subject to them should be exposed to the risk of imprisonment if they fail to comply.
	The noble Baroness said that the appeal to the hearts of Members of the Committee because of hardship is overstated because there will be hardship payments. In the provisions, we learn that those will not be available until two weeks after the orders bite. So is it possible to survive for a fortnight on an empty stomach but not for six weeks or six months?
	The noble Baroness said also that the payments for housing benefit would not be affected. But housing benefit payments are often less than rents. What happens to the unfortunate person who must meet those payments out of income? Even if he receives a hardship payment, the whole amount is not clawed back and the income element is untouched by the hardship payment.
	We need to look at the practical effects of the proposed provisions. The practical effect is that many people, who are fairly incompetent at managing their lives in any event, will find it impossible to do so without resorting to crime.

Baroness Thornton: Along with my noble friend Lady Massey, it is important that I put on record that my noble friend Lady Kennedy does not speak on behalf of many of us on the Back Benches here. I say that partly because recent publicity featuring my noble friend, certainly over the past weekend, suggested that somehow my noble friend is seen as the conscience of this Labour Government. My socialist conscience is in good working order and functioning very well.
	What exercises my conscience is the notion that this Government are not listening or taking seriously the terrifying nature of the lives being led by some of our citizens on the estates and in the housing schemes where violence, robbery and vandalism are a huge problem. Perhaps I may say to the noble Earl that the people on those estates are not usually property owners. Do they not also have a right to be heard in this debate? This proposal is consistent with the Government's philosophy of being tough on crime and on the causes of crime.

Earl Russell: Is the noble Baroness able to rebut the proposition that this proposal will increase crime?

Baroness Thornton: I say that the proposal is consistent with the philosophy which underpins the New Deal, welfare reform and the crime and justice policy. It is a philosophy about rights and responsibilities. I shall answer the noble Earl's question when I address that point at the end of my remarks.
	However, I find it puzzling that some Members of the Committee, including those on this side, speak of rights and responsibilities as a kind of pick-and-mix. It is a pick-and-mix idea of rights and responsibilities. Those people imprisoned in their houses may feel that the rights are all on one side and they may ask who is taking the responsibility.
	This is not a stand-alone measure because, of course, it is part of a jigsaw of measures. It is important to support it as one small part of that.
	Finally, I believe that there is an odd alliance here which includes the noble Earl, Lord Russell, and my noble friend Lady Kennedy. I know that they must be aware that when probation and community service orders are broken, the end result is that people are put in prison. I know that they cannot believe that that is a good outcome. However, I am not quite so sure about the Benches opposite, particularly after listening to the Leader of the Conservative Party, Mr Hague, on this subject during the past week. I merely say that that must give people cause for thought.

The Earl of Mar and Kellie: I want to ask a single question about the application of this Bill in Scotland. In view of the fact that the criminal justice system has been devolved to the Scottish Parliament, will it be intra vires for the Secretary of State to run a pilot scheme in Scotland?

Lord Christopher: I would like to indicate that from these Benches there is certainly not total unanimity about what should be done in this regard. I had better explain where I come from. For some time before 1998, I was involved with three charitable bodies concerned with penal reform and with offenders. The best part of that time was spent as chairman of NACRO, one of the organisations which was a party to the representations which have been made to many Members.
	It has always seemed to me that the concept of deterrence was very confused. We live in an extremely penal-oriented society but one man's deterrent is another man's incentive. I have little doubt that the prospect of going to prison would be a 120 per cent deterrent to the Minister. Indeed, the very fact of being anywhere near the thought would be dreadful to her.
	But I am puzzled by the belief that the withdrawal of this money will deter those who are under those two particular forms of sentence to whom the prospect of going to prison is not a deterrent. I find that totally unconvincing.
	Perhaps I may say to my noble friend Lady Massey that most of the people that she is talking about could not spell the word "contract", let alone understand it. One problem is in being cost-effective in dealing with crime, its consequences and offenders. I assure the Committee that I should not wish to be classed as wet, soft Left or pink in this concept because I was one of the major players in producing the Audit Commission's report on mis-spent youth. I commend it to a number of Members of this Chamber who have not read it. If there is a failing with the youth justice system, it certainly will not be cured by these clauses in the Bill.
	I do not want to repeat what others have said before me. As I have indicated, I wish to be constructive. I have no quarrel at all with being tough on those who break that contract and in dealing with them. But the subtleties of the matter need to be understood. Only about a third of those who are taken back to the courts are given a prison sentence. Where do the other two-thirds fall?
	I believe that the real answer lies in doing something tough quickly and getting those allegedly in breach before a magistrate fast. I understand that on average it takes about six weeks. In some parts of the country I believe that it takes a good deal longer, which is utterly ridiculous. If we want people to feel that there is a deterrent and that if they are caught they will be dealt with quickly, we must deal with them quickly. Because we have dealt with them so slowly--as set out in the misspent youth report--the whole system has fallen into disrepute with such people.
	There is also the belief that somehow or other the public will feel satisfied if this provision is enacted. Of course, in terms of taxation and cost, the price will be a great deal heavier. I have no doubt whatever that the consequences of this will lead to increased, often nuisance crime. I see no constructive point in that at all.
	Perhaps I may conclude with an anecdote. In the 1960s I used regularly to visit two London prisons, where I spoke to prisoners who were due for release within two or three months. After a short while it was borne in upon me that, whether one liked it or not, it was desirable to try to remove any possible causes of grievance on release. Many of these men and women look for something to justify doing what they should not do. I came across several prisoners who returned to prison quickly. They had left prison, got a job, promised their wives that they would go straight and so on. Then pay day came on the Friday and they found that the inspector of taxes had taken 30 per cent of their pay so they went home with a lot less than they had thought or had promised to go home with.
	That is a simple, mechanistic issue that, I hope, has been dealt with. I found the Inland Revenue extremely co-operative. At the end of the day a form was produced and given to any prisoner who wanted it so that he or she left prison with a piece of paper saying, in the majority of cases, that he or she is not liable to pay any tax. Therefore, the potential sense of grievance is removed.
	This proposal invents a new potential sense of grievance. It will not be understood, except in its simplistic form. I hope that we shall not be required to vote on this matter as I hope that the Minister and the Government will think through whether there is not a better answer to dealing with this problem.

Lord Baker of Dorking: I hope that the Minister will carefully consider the points that have been made not only from this side of the House and from the Liberal Democrat Benches, but also from the Benches behind her. The measure that she proposes is offensive on two grounds of principle.
	The first principle is that the responsibility for trying to condition criminal behaviour lies with the Home Office. Those of us concerned with bringing in criminal justice Bills know only too well that this is an immensely complex measure. Whatever proposals one brings forward, one must be satisfied that one will not increase the incidence of crime, rather than reduce it. That requires a long study of criminological reports which are available only in the Home Office, in our system, or to various criminological departments in our universities. That is not the responsibility of the Department of Social Security. The Minister cannot be expected to make the case convincingly on this point because she is not responsible for such matters. Previous Labour governments and previous Conservative governments have always observed that important principle. The consequences of the Minister's suggestion is that quite lowly paid officials in the Department of Social Security will make a decision which was never intended to be part of our criminal justice system.
	The second principle is that I do not believe that one should use the withdrawal of benefits and entitlements as some sort of further punishment. For many years, the noble Lord, Lord Christopher, represented the interests of the Inland Revenue and he could advise the Minister that if one of his staff had been convicted of grievous fraud, convicted and sent to prison, his or her Civil Service pension would not be removed.
	When a judge was found guilty of smuggling--I believe, bootleg liquor into this country from France--there was a suggestion that his pension should be removed. The noble and learned Lord, Lord Hailsham, the then Lord Chancellor, said that he would not do that, thus preventing other judges following suit.
	The principle is wrong, as the noble Earl, Lord Russell, said. This measure cannot be used as a yo-yo penalty to withdraw entitlements. If it can be used in relation to breaches of community orders, why not use it in relation to breaches of probation orders? The Minister will say that such a person has been convicted. What about someone who breaches a probation order six times and commits six offences in between? Shall we try to condition his or her behaviour by using these sorts of penalties?
	I suggest that the Minister should listen carefully to the words of the noble Baroness, Lady Stern, who has spent most of her life and career dealing with offenders, prisons and criminals. She probably has a greater understanding of the motivation of criminals than anybody in this House. The Minister should also listen to the noble Lord, Lord Christopher.
	This is the sort of proposal that is dreamt up on a Saturday afternoon in No. 10, when the spin doctors have come in and said, "The Sundays are going to say that we are weak on law and order; come on, Tony, come up with some really clever idea, a spiffing wheeze that will get us the headlines for a few days". They have had the headlines for a few days; they will have the headaches for years.

Lord Brookman: Perhaps I can intervene on that point which I regard as somewhat unkind and grossly unfair. In relation to the opening remarks of the noble Lord, Lord Windlesham, who asked why the Department of Social Security blundered into these proposals, if he listened to the noble Lord, Lord Davies of Coity, and the noble Baroness, Lady Thornton, he would understand why the Government had to do something about the situation with which the people in this country live. It is absolute chaos out there. I do not know how many noble Lords visit the areas that have been referred to, but they are out of hand and running wild. Our people require a government who care more about the poor than did the Conservative government during their 18 or 20 years in power. We are talking about a government who genuinely care; something needs to be done.
	This is not necessarily a complete solution, but it is a solution to how to deal with the problem. This is not a solution devised by judges or barristers. We have heard a lot from them this afternoon, protecting, some would say, their own interests, as ever. It is about a government who are trying to deal with the specific problem. I suggest that they be given our best wishes to proceed in the way that they intend.

Lord Windlesham: Before the noble Lord sits down, can he say how there would be greater protection in the neighbourhoods that he has described so emotively if offending is increased as a result of this measure?

Lord Brookman: I take the view that this Government are concerned with responsibilities and benefits. Why cannot these people toe the line when they know the issue with which they are faced?

Lord Goodhart: Reducing benefits as a punishment for non-compliance with a community order is profoundly objectionable. The reasons have been expressed extremely powerfully by my noble friend Lord Russell and, with the exception of four speakers from the Government Back Benches, by everybody else who has spoken. It appears, not only from the speech of the noble Lord, Lord Christopher, but also from the body language of a good many who have not spoken, that those on the Government Back Benches are at least as much in support of the noble Baroness, Lady Kennedy, as they are in support of the Government's position.
	These points have all been made extremely well by many speakers. I want to concentrate, therefore, on a more limited question; that is, whether Clause 61 complies with the European Convention on Human Rights. I am doubtful whether, in itself, reducing benefits as a form of punishment is a breach of the European convention. I am tempted to say that it amounts to inhuman treatment under Article 3, but it possibly falls a little way short of that. I see from his body language that the noble Lord, Lord Goldsmith, clearly takes that view.
	I shall not go through the other arguments, save to say that it is well known that one of the defects of the European convention is that it does not deal in any way adequately with the problem of discrimination. While the noble Baroness, Lady Kennedy, pointed out effectively and unchallengeably that the provision discriminates against the poor, and my noble friend Lord Dholakia pointed out, equally effectively and unchallengeably, that it discriminates against ethnic minorities, they do not in themselves constitute breaches of the European convention as it now stands. But what is plainly in breach of the convention is the fact that the proposed punishment is to be imposed before conviction.
	This is an extraordinary provision. Clause 61 may be, in form, a civil penalty. But in substance it is a criminal one because it imposes a penalty for misbehaviour. It will undoubtedly be recognised as criminal proceedings by the European Court of Human Rights when these provisions, if they become law, are challenged, as they plainly will be.
	The European Convention on Human Rights provides, as does British law, a presumption of innocence. What happens to that presumption of innocence under Clause 61? What we have here is not a presumption of innocence, but a presumption of guilt because the penalty is imposed as soon as the information is laid and the Secretary of State has been notified of that fact. It is true that under Clause 61(6), if the court finds that there has been no failure to comply with the community order or there has been a reasonable excuse for non-compliance, the offender has those benefits made up. But that is not good enough. As my noble friend Lord Russell pointed out, the reduction of benefit will in itself cause severe hardship and it is not good enough, in the end, to say that the offender may receive back the money that he or she should have had in the first place. That will not compensate for the hardship caused by the unjustified withdrawal of benefits.
	Why do the Government want to impose sentence before conviction? There seems to be no reason. It does not necessarily undermine the principle of Clause 61, even if one sticks to that.

Lord Davies of Coity: Perhaps the noble Lord will give way. I am intrigued by the question of penalty before conviction. How would the noble Lord answer if the legislation were framed in such a way that the person going before the courts was given a community service order on the understanding that, if they broke it, they would lose benefit?

Lord Goodhart: It would still have to be proved that they had broken the order. Surely, it would be better to wait a few weeks and make sure that a harsh penalty is not being imposed on an innocent person; a person who is innocent of the breach of the order.
	The specific element of imposing penalty before conviction is almost certainly contrary to the European Convention on Human Rights and is perhaps the most objectionable of all the objectionable features of this clause.

Lord Archer of Sandwell: I am grateful to the noble Lord for giving way. I say nothing of the merits of his argument. But if he is predicting the way in which an application to the Court of Human Rights might emerge, does he remember the case of Duhs v. Sweden, where an ex post facto remedy by a court was regarded as justifying what was done?

Lord Goodhart: The facts of that case are a long way from the facts of this case. I do not believe that, in a case of this kind, the court would find any justification for imposing a penalty before the conviction.
	I conclude by saying that I feel that this is perhaps the most objectionable provision of what is, in itself, an entirely objectionable clause. I hope that in due course the whole of Clause 61 will be withdrawn by the Government.

Lord Goldsmith: The question of the legality of this provision was rightly raised by the noble Lord, Lord Goodhart. There was a risk that that question might go by default; that it might be assumed by Members of the Committee, in the light of comments that were made, that this provision would be unlawful. I want to spend a few moments on that issue. I do not want to say anything about the question of underlying policy, on which so much has been said so powerfully on both sides of the argument.
	I agree with the noble Lord, Lord Goodhart, that the question of legality depends upon Article 6 of the European Convention on Human Rights. I agree with him, and that is why I was noticeably shaking my head, that this cannot be a question of inhuman treatment, nor does he suggest that it would be. Nor can it be given the state of the law on discrimination; in my view, a question of unlawful discrimination. My noble friend Lady Kennedy of The Shaws referred to Article 7--no punishment without law--but should this Bill be passed by this Parliament, that could not be an issue.
	Reference was also made by several Members of the Committee to the principle of no double punishment. In so far as that is to be found in the European Convention on Human Rights, it is to be found in a protocol which, so far, this Government have not ratified. In any event, the idea that more than one detriment may follow from a single act is well known, well understood and happens quite frequently.
	The real question, therefore, relates to Article 6. What is the substance of the requirement of that article? First, that those who have their civil or criminal rights to be determined, should have them determined by a court, independent, impartial, in public and in a reasonable time. But--and this is the substance and the purport of the intervention of my noble and learned friend Lord Archer--the European Court of Human Rights, in its jurisprudence, recognised that that does not require that in every case the penalty be imposed only at the time of determination by a court. There are a number of cases--my noble and learned friend referred to one--the case of O ztu rk; the case of Malige is another, and in its judgment the court said that,
	"where a penalty is criminal in nature there must be the possibility of review by a court which satisfies the requirements of Article 6 - 1, even though it is not inconsistent with the Convention for the prosecution and punishment of minor offences to be primarily a matter for the administrative authorities".
	That refers back to earlier jurisdiction of the court and is a commonplace in certain countries that, for certain minor offences, administrative authorities impose sanctions which have to be paid at that stage. There is the right to determination by the court and, on determination, that penalty is returned, so long as that court is, as magistrates' courts undoubtedly are, public, impartial and hear the offences within a reasonable time. Those conditions are required.
	I recognise that there is scope for argument, as there always is under the European Convention on Human Rights, as to which side of a line something would fall. There are certain features about this regime, however, which justify the view which my noble friend the Minister has expressed on the face of the Bill, pursuant to legal advice which the department has received, and she has told your Lordships that this will comply with the ECHR.
	Those conditions seem to me to be these. First, the very important fact that, under the proposed legislation, the question of whether or not ultimately the benefit is to be lost is for the magistrates' court. That is plainly a critical consideration. Secondly, the degree of punishment involved--and I am prepared for these purposes to treat it as such.
	My understanding is that under the proposed regulations this will be limited to a four-week deprivation; secondly, that it will not be a complete deprivation of benefit, depending upon the circumstances of the individual. Reference has been made to a hardship allowance remaining available and to income support not being completely removed. Finally, the approach corresponds to the general approach taken under the legislation, where the conditions for benefit are determined by administrative act in the first instance.
	Those considerations lead me to the view therefore that on the question of legality this is not, in the words of the noble Lord, Lord Goodhart, certain or almost certain to breach the ECHR. I take the opposite view. I recognise that there is a grey area but, having regard to the jurisprudence of the court which exists, I take the view that the Government are justified in putting this forward on the basis that it will not do so. As the Minister has said in this House, should it turn out that the court takes a different view, effect will have to be given to that. As it stands, however, I suggest that your Lordships should not consider this matter on the basis that it will be illegal. On the basis of the merits of the argument, I say nothing.

Lord Ackner: Before the noble Lords sits down, can he help me in this matter? He says that the real question is whether there has been a breach of Article 6. Is not the real question whether punishment before conviction is an insult to one's elementary sense of fairness?
	The niceties of the European law, deeply stimulating to the lawyer, have absolutely no relevance to the question here of fairness. How does he deal with that?

Lord Goldsmith: It is very refreshing to hear the noble and learned Lord, Lord Ackner, dismiss law in that way. As the noble and learned Lord will have heard, my observations to your Lordships were addressed to one argument which has been advanced in support of the proposition that these clauses should not stand part of the Bill, namely that these provisions will be unlawful.
	I made it very plain that it was no part of what I was dealing with to say anything about the policy of the matter. That is for your Lordships to determine and others on both sides of the House have spoken eloquently about it.
	So far as the law is concerned I believe, particularly in the light of the observations of the noble Baroness, Lady Kennedy of The Shaws, the noble Lord, Lord Goodhart, and of others, that it is important to address the question of legality. That is what I have sought to do and I hope that it will be of some assistance to your Lordships.

Lord Phillips of Sudbury: The noble Lord, Lord Goldsmith, spoke of other jurisdictions and used the words "minor administrative penalties". Is it the noble Lord's thinking that withdrawal of benefits could conceivably be viewed as minor in the circumstances with which we are dealing here?

Lord Goldsmith: Yes. I emphasise the limit in terms of time and in terms of amount. I do not doubt for a moment that, for the individual involved, the effect is significant; but when one looks at this in the overall context of the criminal law, punishments, procedures, and puts it in the scale, the European Court of Human Rights has recognised that, so long as there is a right of review by a court which offers these guarantees--which the magistrates' court does and which is required under this Act--then it does not breach the European Convention on Human Rights. As the noble Lord puts it, the punishment is placed first or, as I believe the Minister will explain it, the condition for the benefit is triggered at an earlier stage. I was prepared to approach it on the basis of punishment, in order to deal with the argument.

Lord Warner: I apologise for missing the beginning of this debate, but I have an excuse. Perhaps I may offer the excuse to your Lordships and make a few comments on this issue from my perspective as chairman of the Youth Justice Board. I have been out of London, launching a youth offending team, following the excellent report from the Audit Commission on misspent youth. I am pleased to be able to say that these changes are going extremely well.
	Perhaps I may be allowed to offer a few points on the policy underlying this. If it is your Lordships' wish that I should not then I will, of course, sit down.
	I will take that silence as consent to go ahead! First, there is the issue of conditionality. There is in this provision the notion of conditionality of benefit. This is not a new principle. Conditionality for paying benefit is a long-established principle, as I know from my own experience of working in social security.
	What may be deemed a little novel is the idea that conditionality should be linked to breaches of criminal justice orders. The conditionality of social security benefit payments, however, is part and parcel of the individual's contract with the state. The state agrees to pay benefits on certain conditions if certain contingencies arise. We are doing no more in this provision, I suggest, than extending that to another part of the individual's contract with the state. In this circumstance the contract is one in which the individual has undertaken to abide by the terms of a particular court order. The terms of the court order and the arrangements for its enforcement have been made clear to that individual. This provision does no more than produce a lower alternative penalty than the existing arrangements for breaches of that court order, which is imprisonment.
	The noble Baroness has made it clear that the terms of this punishment will be no more than a four-week deprivation of the benefit and there will be hardship provisions. That does not seem to me to be a very onerous set of circumstances if you consider the alternative, which might be imprisonment for the breaches of the court order.
	The noble Lord, Lord Baker, implied that all wisdom in these matters should reside in the Home Office. A lot of wisdom does reside in the Home Office. I suggest to the noble Lord, however, that it is also apparent that not all of the changes which the previous government introduced to the criminal justice system were the result of carefully researched and weighed proposals, supported by a basis of academic research. Sometimes, I suggest, people make judgments about sensible ways forward in the light of circumstances which people face.
	On the issue of whether or not people understand, it seems to me that the suggestion that people do not understand the consequences of a community order is rather patronising. They have been through this process. The circumstances have been explained to them. They have knowingly breached the contract that they have undertaken to carry out. The response proposed in this clause, it seems to me, is proportionate to the offence that they have committed.

Lord Ackner: Before the noble Lord sits down, I have a question for him. I understand his application, generally, of the principle of "conditionality", but I should like some assistance on the following: who is to establish whether the condition has been broken?

Lord Warner: The decision maker responsible for the enforcement of the community order in the first place would draw the attention of the justice to the fact that there has been a breach of the condition.

Lord Ackner: To say that someone would draw the attention of the justice to the fact that there has been a breach seems to concede that the court is the organ which makes the decision.

Baroness Hollis of Heigham: Perhaps I may assist the noble and learned Lord. The procedure is virtually identical to one where an employer, for example, reports to the DSS that someone has voluntarily left work or, indeed, where a doctor dealing with an incapacity benefit or DLA form has stated that the person is better and no longer entitled to claim. Such information would be re-laid to the decision maker within the DSS who makes the decision. The same procedure would be followed here.

Lord Phillips of Sudbury: Members of the Committee are grappling with what is ultimately a practical issue, not a theoretical one; namely, whether this clause will or will not assist the aims that we all share to reduce criminality and aid the rehabilitation of offenders. The noble Lord, Lord Warner, has a great deal of experience in these matters, so I put this question to him. Can he say why the National Association of Probation Officers, whose members will have more to do with this than any other group of people, is so fiercely opposed to this clause?

Lord Warner: I do not wish to trade views on the National Association of Probation Officers with the noble Lord. However, the association has not always supported well-intentioned and well-thought-out reforms for some parts of the criminal justice system. On this occasion, it is possible that, like all human beings, it may be in error as to the possible consequences.

Lord Stoddart of Swindon: I have been sitting here throughout the debate. Therefore, I intend to say a few words on the subject. I thought that we believed in equality before the law in this country. However, it seems to me that there is no equality before the law in this case because some people can be punished in advance of being convicted. So there is no equality before the law. That is a tenet that we ought always to keep in mind.
	My noble friend Lord Brookman said that something must be done, which is something that we are always hearing. Of course, something must be done; but what must be done must be right. I do not believe that what we are proposing to do here today under this clause is the right way to proceed. Indeed, if such a provision had been proposed by a Tory government and put forward by, for example, Mr Redwood, there would have been a public outcry. I also have a feeling that that public outcry would have been very ably and brilliantly articulated by my noble friend the Minister--and quite rightly so. I am sorry that she is not doing that today.
	My noble friend Lady Kennedy of The Shaws is not without friends on these Benches. I am glad that she is not without friends because if the Labour Party is about anything, it is about justice. It is certainly about justice for the poorest people in our community. That is another reason why I believe that this clause is wrong. It does not do the right thing for our people--I repeat, "for our people".
	I should also like to add that our justice system does not usually embark upon administrative punishments. People in this country have believed over many hundreds of years that justice must not only be done, it must be seen to be done. Administrative justice taken in an office in Whitehall, or elsewhere in a regional office out in the country, cannot be seen to be done; indeed, justice cannot be seen to be done. On every count, there is no way in a democratic country that such a provision should be written into our law. Like my noble friend Lord Christopher, I hope that my noble friend the Minister will give us the assurance tonight that she will take this provision away and reflect further upon it. If she does not and the matter goes to a vote, I shall feel tempted--perhaps obliged--to vote with those who oppose the Question that Clause 61 stand part of the Bill.

Lord Higgins: Anyone intervening in the debate at this stage can do so only with an immense feeling of diffidence and inadequacy. The arguments advanced by many noble Lords have, in many cases, been the result of many years of experience in the very areas now under discussion, whether social security policy issues or, indeed, the law. In his opening remarks, my noble friend Lord Windlesham reflected on years of experience at the forefront of such issues; and, indeed, was backed up by no fewer than two former Home Secretaries.
	Clearly this is a matter that goes straight across party lines. All the signatories opposing the Question that Clause 61 stand part of the Bill come from different parts of the Chamber--for example, from my own side, from the Liberal Democrat Benches, from the Labour Benches and, indeed, from the Bishops' Benches. This is a matter of very great importance. Many quotes have been given from outside organisations that are concerned with the issue. I should add that I do not believe that I have received a single representation from an outside body which is actually in favour of what the Government propose. As many quotations have been given, I shall refer to just one or two.
	I am quite considerably influenced by the National Association of Citizens Advice Bureaux, which is certainly very much in the frontline as regards these issues. It says that,
	"the proposal to link compliance of community orders with payment of social security, could put many of our clients in a vulnerable position. These measures are part of the Government's crime reduction strategy, but we fear that far from reducing crime, the proposals, if introduced, could have the opposite effect. Those already struggling on benefits could well be tempted to commit crime if benefits are reduced, or even worse, withdrawn".
	In partial reply to the noble Lord, Lord Goldsmith, I do not believe that one should underestimate in any way the severity of the penalties on those who are already extremely poor.
	One noble Lord on the Back Benches opposite said that the Labour Party is in favour of protecting the poor. But these measures will undoubtedly have a serious effect on many very poor members of our society. I understand that the Penal Affairs Consortium, which has already been mentioned, considers that this measure is objectionable in principle and that it will prove counter-productive in practice. It says that pushing poor people into even greater poverty must increase the temptation to steal, burgle, rob, shoplift, solicit or sell drugs.
	Finally, I quote from the National Association of Probation Officers:
	"The effect of reducing benefit by administrative means is a non-judicial form of punishment. The measures will remove from the courts their power to deal with breaches of their own orders".
	All these matters give grave cause for concern. The basic thread of the argument is the following. While we on this side of the Committee of course strongly support measures to improve law and order, if the measure itself will be counter-productive--as so many organisations outside the Chamber which are concerned with this matter believe to be the case--clearly there is no point in introducing it. We need to consider that matter from a practical point of view.
	I was rather surprised to note that there was no reference to the European Convention on Human Rights until late in the debate. These matters were not raised until the intervention, first, of the noble Lord, Lord Goodhart, and then of the noble Lord, Lord Goldsmith. I am not a lawyer and I have not taken legal advice on these matters. However, the implementation of the European Convention on Human Rights with regard to British law is very much in its infancy. The Minister has stated clearly on the face of the Bill:
	"In my view the provisions of the Child Support, Pensions and Social Security Bill are compatible with the Convention rights".
	I believe that that matter may give rise to problems because we do not know on what advice the Minister has made that statement. To say the least, the exchange between the noble Lords, Lord Goodhart and Lord Goldsmith, suggested that there is some doubt on this matter. It would be helpful to know whether the statement is based on the advice of lawyers in the Department of Social Security or on that of lawyers in the Foreign Office. Where does the legal advice originate? While it is a well-established convention, which I support, that the source of advice to Ministers should not normally be revealed, none the less I believe that we should be given some idea of the authority on whose advice the statement was made.
	In another place my honourable friend Mr David Willetts strongly expressed his grave doubts about whether the measure conformed with the convention. He asked on what basis the statement made in another place that the Bill was compatible with the European Convention on Human Rights was justified. Ms Eagle replied in considerable detail on 18th January. Some of the points that she made are technical and legal. As a non-lawyer I find that to some extent they rather fly in the face of common sense. Ms Eagle stated:
	"The obligations under Article 6 of the Convention (the right to a fair trial) are complied with as those affected by this measure will have a right of appeal to an independent tribunal in respect of the decision to withdraw or reduce benefits and the magistrates or Crown Court",
	will assess the matter. There may be a right of appeal, but that is a right of appeal against a conviction which has not yet been incurred. We are talking about purely an administrative act. Therefore, to talk in terms of a right of appeal seems to me a rather strange way of looking at the matter.
	There is an even more technical reply with regard to Article 7 (no punishment without law). A similar point is made to that made by the noble Lord, Lord Goldsmith, this evening; namely, that, Article 7,
	"does not arise as the measure (even if it was regarded as criminal in nature) will only apply to those given community sentences after this Bill has become law and been commenced. There will be no retrospection".--[Official Report, Commons, 18/1/00; WA430.]
	I do not think that anyone suggested that there would be retrospection. But, be that as it may, it would appear that there is no question of there being no punishment without law; that is to say, without a statute having been passed, but, rather, of whether there should be any punishment without a trial. I give way.

Lord Goldsmith: I am grateful to the noble Lord for giving way. Although Article 7 is said to concern the matter of no punishment without law, it concerns retrospection. That is all it is about. It is about not holding people guilty of criminal offences which were not criminal at the time that they were committed.

Lord Higgins: I entirely defer to the noble Lord's vastly greater knowledge as I have none on this subject. However, I am trying to draw attention to a number of serious problems which we believe need to be addressed.
	As regards discrimination, we seem suddenly to have got into the philosophical mode of saying that there is a contract between the community and the state, but that it applies only to people who are on benefit. The people who are on benefit will be penalised by the measure we are discussing. An extra penalty may be imposed on people on benefit. The extra penalty will not be imposed on people who are not on benefit. I should have thought that by any standards that must be discriminatory. Therefore, as I say, I believe that serious problems arise with regard to these matters and their compatibility with the European Convention on Human Rights.
	Earlier this afternoon we defended the position of the Minister who replies on behalf of the Government. We understand that that is her duty this evening. However, I wonder whether the practice which was available--indeed, I believe that it is still available in the House of Commons--of asking the opinion of the Law Officers on a particular Bill might be adopted in this instance. Up to now that has not been possible as the Attorney-General and the Solicitor-General have both been in the other place. However, that is no longer the case. Perhaps by the time we reach Report stage the Attorney-General may care to give us a more definitive view on the matter, given the clear division of opinion between the noble Lords, Lord Goodhart and Lord Goldsmith. I leave these legal matters on one side, but I believe that some serious issues have arisen which ought to be considered between now and Report stage.
	The noble Lord, Lord Goldsmith, appeared to argue that the penalties we are discussing are not severe. Others have referred to the hardship fund. Many of the people we are discussing claim income support. Another discriminatory aspect arises in that connection in that the penalty that is imposed will depend on which benefit the person involved is claiming. There is a huge difference between the levels of different benefits. I forget the exact figures but perhaps the noble Baroness can remind us of the sums that might be lost in terms of income per week. As I say, a discriminatory aspect arises with regard to the different benefits that are awarded.
	The hardship fund is discretionary. I understand from what organisations outside have told me that under the circumstances we are discussing a pregnant woman could find her benefit reduced to 80 per cent of its normal level. A mother with dependent children could find that her benefit is reduced to 60 per cent of its normal level. The benefit may be cut only for a short period of time. On the other hand, it may be cut for a considerable length of time. One cannot say that these are not important penalties. The allegations that are made against people should be examined before a decision is taken.

Lord Goldsmith: Again I am grateful to the noble Lord for giving way. I never said that these measures were not important. I recall that I said, in answer to the intervention of the noble Lord, Lord Phillips of Sudbury, that to the individuals concerned they would be important. I said that in the range of criminal penalties and criminal sanctions (assuming these to be such for these purposes), from the most serious to the least serious--the European Court of Human Rights having said that at the lower end it is not necessary that there should be a finding by a court before an administrative sanction is imposed--in my view, having regard to the features I have identified, these objectively would fall into that lower category. I never suggested that it would not be important to the individuals concerned. Indeed, I believe I said that it would be.

Lord Higgins: I fully accept what the noble Lord said on both points. It is common ground between us that these penalties are severe--that may not be exactly what the noble Lord said--for the people at the front end. I fear this may cause them serious problems. I notice that I have the assent of the noble Baroness, Lady Kennedy of The Shaws, in this regard. They are penalties which will seriously affect individuals, and they will be imposed simply as a result of allegations being made against them.
	None the less, we have had a fine debate on this subject. Many important issues have been raised. I am inclined to the take view expressed by the noble Lord, Lord Christopher--again speaking with considerable experience--and I hope that the Government will take the clause away, think very carefully about it, and realise that there are very serious problems here that the Committee may well not accept.

Baroness Hollis of Heigham: As the noble Lord, Lord Higgins, said, we have had a careful, thoughtful and fascinating debate. I do not know about being fascinating, but I shall try to be at least careful and thoughtful in my response.
	The proposal that these clauses should not stand part would remove from the Bill our proposals to link entitlement to benefit to compliance with community sentences. The Committee will know that we are reforming the welfare state. We believe that this issue is about contract. In a foreword to the Green Paper A New Contract for Welfare, the Prime Minister stated:
	"on the basis of a new contract between citizen and state, where we keep a welfare state from which we all benefit but on terms which are fair and clear ... It is a contract between us as citizens. It needs to be a fair deal ... one which is fair within and between generations".
	This measure is about rights and responsibilities in relation to benefits--that is why it is a DSS matter; it is not primarily a criminal justice matter. The Government believe that rights to benefits and the fulfilment of responsibilities to society must be clearly linked. Our general approach is that it is right for people of working age who are able to work to do what they can to help themselves back into work and into society. If they do not meet this basic condition, then benefit should not be made available on the same basis as for those who do.
	In the case of the community sentence sanction, we do not believe that it is fair, as my noble friends Lord Brookman and Lord Davies of Coity said--nor would it be regarded as such by those who do meet their obligations to society by paying taxes to support those on benefit, by avoiding crime or by assiduously serving the sentences that they are given--that community sentence offenders who do not keep their part of the bargain with society should expect to be supported on the same terms as everyone else. Those who are able to turn up and sign for their benefits but not able to turn up to meet their probation officer, should not expect the same terms.
	I acknowledge the point, made particularly by the noble Earl, Lord Russell, that this is an extension of the principle of conditionality that has been within our benefit system for some time. Our benefits system is not, and never has been, a birthright. As my noble friend Lady Kennedy of The Shaws said, it is not simply about needs and entitlement. It is more complicated than that. We impose, as did the previous Government, as a society conditions for the receipt of benefit and, with the reform of the benefit system, we are indeed imposing some new conditions. They are conditions associated with good citizenship, not simply with needs and entitlement.
	Underpinning that concept of good citizenship, obviously, is work. The conditionality already in the social security system associated with work and training for work is reflected in measures developed for the New Deal for unemployed people, in the work-focused interviews in the ONE service, and in the long-standing conditions for entitlement to jobseeker's allowance. Those, of course, attract sanctions of up to 26 weeks' loss of benefit.

Earl Russell: Does the Minister understand that when she takes the principle of linking rights and responsibilities as a rule for the imposition of legislation, she is taking a sound principle of private morality and, by importing it into the public sphere, she is turning it into an authoritarian imposition of government judgment? It does not belong here.

Baroness Hollis of Heigham: I do not accept that for one moment. One of the deep divisions between myself and the noble Earl, Lord Russell--I hope I am not doing his position an injustice--is that he believes that someone has a birthright to benefit; an entitlement to benefit that no one has a right to sanction. We do not believe that. Benefit is the result of a decision by taxpayers--all of us--to support people who cannot for good reason support themselves. Where people can support themselves, they should; and where those people fail to abide by other conditions of their benefit entitlement--for example, by turning up for interviews on time and so on--that, too, should attract sanctions.
	I do not always agree with the Conservative Benches, obviously, but here there is a profound difference between myself as a representative of the Government and the noble Lord. We believe that if society offers people benefits because they are not in a position to support themselves, society has a right to expect appropriate behaviour from them. I agree with the noble Lord that there can be arguments about what is "appropriate"--I accept that--but that we have the right to impose such conditions and exact sanctions if those conditions are broken seems to be not in dispute. I should be surprised if the Committee felt that benefit was an entitlement come what may in our society.
	There is a different kind of conditionality associated with a different kind of good citizenship--the noble Earl, Lord Russell, has pressed us today and on Second Reading about departing outside the realm of benefit--which concerns the preparation for parenting, the Sure Start maternity grant. Payments are to be made on the birth of a child to those in receipt of means-tested benefits and tax credits in exchange for confirmation that they have received appropriate advice from health professionals on maternal health and the health and welfare of the new-born. Previously, all new mothers had to do was to provide evidence of pregnancy; now, if they do not seek and receive that advice, no payment is made. The benefit payment of the Sure Start maternity grant is made conditional on mothers seeking appropriate healthcare, something outside the benefit field.
	The completion of community sentences is manifestly a question of good citizenship and, like work and preparation for parenthood, it is beneficial to the individuals themselves. These are criminal sentences and, as noble Lords have described, by virtue of that fact they contain an element of punishment and of reparation. We want compliance so that offenders' debts to society are repaid. But we also want compliance, as my noble friend Lady Massey said, because there is a rehabilitative aspect to community sentences. Completion is, or should be, beneficial to the offender. There may be no obvious direct link between the breach of a community sentence and the need for benefit, as there is between the requirement to seek work and benefit receipt, but those links are partly in the eyes of those speaking today.
	We regard looking for work and complying with community sentences as important obligations to society which involve people doing their part to help themselves. As my noble friend Lady Massey said, that may be in terms of work skills, of basic literacy, of the discipline of coming in on time and behaving appropriately. All those matters may be part of a community sentence. It is appropriate behaviour which we hope will result in offenders not continuing to offend. Compliance with community sentences is closely linked to playing a full part in society through work. We do not believe that these issues are unrelated.
	This measure is limited in its extent. In no way does it confer powers to extend conditionality beyond breaches of community sentences. Again, I was pressed on this by the noble Earl, Lord Russell. I would not on principle rule out further extensions, but it would be for Parliament to debate whether particular behaviour is sufficiently undesirable and to be so strongly discouraged that it merits the withdrawal of state support via the benefit system.
	This measure sits squarely with the direction for the reform of welfare that we should be pursuing. We do not want to continue sending mixed messages about what is and what is not acceptable behaviour by paying money from the public purse to those who have, despite repeated chances, shown themselves not willing to abide by the rules that society has set down. Those originally sentenced to a community sentence rather than a prison sentence who then go on to break it can--I speak now wearing my hat as someone who has served on a city council and represented a rather poor ward for 25 years--make life on our poorer estates an absolute misery for residents. When I have been canvassing over the years those residents have put to me that they are utterly baffled why they as taxpayers are expected to support them with benefit while in the meantime they continue to engage in bullying behaviour, hooligan behaviour and vandalising behaviour. They do not understand why they, as law-abiding residents, should continue not only to accept that behaviour but financially support it by paying benefit while the offenders themselves fail to observe their community sentence.

The Earl of Onslow: I have listened to practically all of this debate. What has come out is that if we take away that benefit, crime will go up. The noble Baroness has not addressed that problem. She has rightly brought up the problem of the poorer estates that are vandalised. But will the taking away of benefit prevent one incidence of aerosol spraying, one television being nicked or one drug being pushed? Until she answers that question, I suggest that we should listen very carefully to what the noble Baroness, Lady Kennedy, said.

Baroness Hollis of Heigham: The noble Earl is absolutely right to say that I have not answered that question. I have not come to it yet. I shall now do so, because that is the whole point of having pilots.
	I do not accept the validity of criticisms which focus on this matter as if it were simply a criminal justice measure and see it only as a punishment measure designed to deter breaches, though we believe that also. We hope and expect that it will deter breaches because the completion of their community sentence is in the best interests of offenders. That is why the court in its wisdom made that judgment in the first place. It is not the DSS but the courts which decide that community sentences are the best way of providing punishment, reparation and rehabilitation. I should have thought that your Lordships would want to see anything that strengthens the capacity of the criminal justice system to deliver compliance with community sentences.
	I acknowledge that there will be some who interpret the withdrawal of benefit as the punishment for something they have done or failed to do. At this stage, that is not our primary intent. What we are doing is attaching an extra condition to benefit. If you seek benefit, one of the conditions for retaining it is that you comply with a community sentence.
	A few noble Lords--primarily those who have considerable expertise in this field--have raised ECHR issues. I refer in particular to the noble Lord, Lord Goodhart, and, to a lesser extent perhaps, the noble Lord, Lord Higgins. Those points were answered fully and elegantly by my noble friend Lord Goldsmith and so I shall not seek to answer the ECHR points in great detail. I shall defer to my noble friend Lord Goldsmith on those points. But I want to say that the statement I have signed on the face of the Bill--under Section 19 of the Human Rights Act 1998--I did not sign lightly; nor is it included in the Bill lightly. I took thorough advice and I sought repeated advice. After that I have had full legal advice. I believe that the case I have outlined, that this measure is part of the redefinition of the principles according to which benefit payments are made, is a strong one and an important element in the defence of any challenges to those measures in the courts. As my noble friend Lord Goldsmith said, we believe that these measures are proportionate to our objective aims and can and will withstand legal challenge.

Lord Goodhart: I am grateful to the Minister for giving way. Can she explain why the Government thought it necessary to impose this penalty immediately rather than wait until the court had in fact confirmed that there had been a breach of the order?

Baroness Hollis of Heigham: I am not going to duck this issue. I shall come on to precisely that point. But the noble Lord, with his experience, and his noble friend Lord Russell will know that in all DSS matters the decision to revoke a benefit on the grounds that there has been an infringement of the conditions of that benefit, whether a failure to turn up for an interview or a failure to hold down a job, is determined by the decision-maker in the DSS. It is no different here. It is determined by the decision-maker in the DSS on the evidence submitted by the probation officer.

Lord Goodhart: With great respect, who is a decision-maker here? It seems to me that under Clause 61 the consequences follow automatically. As soon as the information is laid, the consequences follow. No one takes a decision on that until the court does.

Baroness Hollis of Heigham: They no more or no less make a decision than they do on, for example, sanctioning JSA for failure to observe work-related conditions or, for example, the removal of some of the incapacity benefits--DLA and so on--on the grounds of medical evidence. In one case we get information from the employer and the decision-maker makes that decision; in another case the information on medical benefits will come from the doctor and the decision-maker--the DSS--will take that decision. In this case the information will come from the probation officer and the DSS decision-maker will make that decision. The analogy is complete. That is how the DSS works.
	Decisions about the infringement of conditions of benefit in all of these areas have, ever since the DSS was established, been made by the DSS. That is why it is so important for me to try to seek to explain to the Committee that what we are concerned about here is the condition of benefit, as opposed to questions of second punishments and so on, on which, as a result, the decision-maker in the DSS will say that the benefit conditions have been infringed in exactly the same way as the doctor may say it or the employer may say it. On the basis of that information from the probation officer, the decision-maker will make a judgment.
	The noble Lord, Lord Dholakia, raised a point. However, as the noble Lord is not in his place, I shall write to him. The noble Baroness, Lady Kennedy, made a similar point. She suggested that these measures would be particularly harsh in their effect on women either because--I do not wish to misquote her--more women may be receiving community sentences or, alternatively, and possibly as well, because they have additional responsibilities that might make it more difficult for them to comply with community sentences. It is true that women have additional responsibilities. That is perhaps one reason why very few of them are given community sentences. Only 14 per cent of the 27,000 sentences given in 1998 were to women. But in laying down the conditions for those sentences, the courts and the Probation Service already take care to set conditions which take into account their other responsibilities. I would be amazed if in the case mentioned by my noble friend--the person whose child was seriously ill during the night--the probation officer did not think that that was a reasonable ground for not turning up for an interview the next day.

Baroness Kennedy of The Shaws: Perhaps I may deal with that point because it concerns the position of the probation officer being equivalent to, for example, a doctor saying that someone is no longer disabled. It really is not equivalent because what probation officers will say is that the duty rests with them. If someone is 20 minutes late, it is taken as a non-attendance. Whatever their excuse for being late, a non-attendance is marked as a failure. That is one failure. You need only one other failure. I mentioned a child keeping his mother awake at night, perhaps because of nightmares or earache. That is not enough to call out a doctor in the middle of the night; and what the Probation Service is not allowed to accept, and does not get from doctors, is retrospective medical notes. Doctors are not prepared to give families retrospective medical notes. The probation officer is therefore faced with two instances of failure to comply and an automatic obligation to inform the court and, in turn now, the benefit office. That is where the Probation Service feels most in despair about this requirement from government.

Baroness Hollis of Heigham: I should like to make two points in response. First, as my noble friend will know, women, including those with families and additional responsibilities, comply far better with community sentences than do men. If my noble friend's point was right, they would be less likely to comply.
	Secondly, if my noble friend was right to say that their reasons were not acceptable, surely that would be taken into account by the courts. Perhaps I may proceed with this point before noble Lords intervene. We know that, of the 130,000 community orders issued each year, a little under 30,000 are breached. Less than one-half of 1 per cent of those, when they are reported to the courts, are not upheld by the courts. That amounts to around 400 cases out of a total of 30,000. Furthermore, 200 or so of those 400 cases are withdrawn.
	In terms of the acceptability of the behaviour of probation officers in the judgment of the courts in upholding that behaviour, there is a far more professional standard of evidence and an infinitely higher standard of acceptance of that evidence. By contrast, in the case of doctors' submissions on DLA cases, around 40 per cent of decisions are overturned on appeal. Similarly, a high percentage of JSA cases are overturned on employers' evidence at tribunal. In that sense, the standard of evidence submitted by probation officers to the DSS that a benefit has been infringed is not only higher, but also is almost universally upheld by the courts.
	Other noble Lords have raised questions as regards the timing of the sanction. I believe that the noble Lord, Lord Baker, referred to this. It is imposed at the point when the offender is referred back to the court for an "alleged breach" rather than after the court has found the breach proven. I hope that I am not putting an argument into the noble Lord's mouth, but several noble Lords have made that point. Our procedures follow those already in place as regards social security matters.

Lord Baker of Dorking: I did not raise the matter at all.

Baroness Hollis of Heigham: I am grateful to the noble Lord for confirming that he agrees with the point I am making here.
	I repeat: our procedures here are entirely in line with the way that social security matters have worked for 50 years. As in all benefit sanctions, the decision maker in the Benefits Agency will review evidence. That happens now with evidence from a doctor or employer. For example, an employer might state that someone should not be eligible for benefit because they left their employment voluntarily, but the claimant may argue that it was in fact a case of constructive dismissal. A case such as that poses a much more grey and difficult problem for the decision maker than do the circumstances we are considering here. The decision maker will come to a conclusion based on information purveyed by the probation officer; information which, as I have already said, is almost universally upheld by the courts.
	The decision maker will reduce benefit as provided for in the Bill on the basis of a certificate from the Probation Service that an offender has failed to observe his community sentence and has therefore been referred back to court for a breach. The offender then has a right of appeal against the benefit decision as he would have in the case of other benefit sanctions or decisions by the appeals service. In addition, the criminal court will hear and consider all the evidence relating to the breach to determine whether the breach is proven. That remains entirely a matter for the criminal courts.
	A number of questions about Scotland were put by the noble Baroness, Lady Carnegy of Lour, supported by the noble Earl. Obviously DSS matters are not devolved. I was asked specifically, as this matter is devolved to Scotland, whether it would be intra vires to run a pilot in Scotland. As I say, that is a reserved matter and it would therefore be intra vires to run such a pilot in Scotland.

Baroness Carnegy of Lour: Will the Government now capitulate and not hold a pilot or will they ask the Scottish Parliament to do so?

Baroness Hollis of Heigham: In Scotland at present, loss of benefit can occur when information is presented to a justice of the peace rather than a sheriff. The decision to withdraw benefit rests with an impartial decision maker at the Benefits Agency in Scotland in the same way as in England and Wales. This follows when proceedings are commenced by the issue of a warrant.
	If I have not fully answered the noble Baroness's question, perhaps I may do so in writing. I do not for a moment profess to be very familiar with Scottish law.

Baroness Carnegy of Lour: I wish to press the noble Baroness only on the pilot schemes. If Scotland is not to run pilot schemes on its own system because it is a devolved matter, that is very serious indeed. Surely the Government need to reconcile this with the Scots Parliament and have pilot schemes there, organised by them.

Baroness Hollis of Heigham: I take the point made by the noble Baroness and I shall seek further advice on it. As I said in my reply to the noble Earl, my understanding is that although DSS matters are not devolved, the process of jurisdiction is devolved. That is the reason for the element of complexity here and that is why, at this stage, we do not propose to extend the pilot schemes to Scotland.
	We believe that the benefits sanction needs to be implemented quickly and with certainty if it is to get across the message that community sentences are to be respected and that observance of a community sentence forms an appropriate part of entitlement to benefit. That is what we are seeking to achieve here. Having an automatic sanction which commences at the point when the probation officer notifies the department that someone is not observing their community sentence and is therefore having their case referred to court is a simple and effective deterrent to offenders who might otherwise be tempted to breach their sentence.
	I mentioned earlier that we all know that the Probation Service does not lightly refer people back to the courts. We know also that court decisions made following those referrals are almost invariably upheld.
	The noble Earl, Lord Onslow, the noble Lord, Lord Windlesham, the right reverend Prelate the Bishop of Hereford and my noble friend Lord Christopher all pressed me on the point that this measure would be counter-productive in that it will encourage more crime. They have argued that once benefit is removed, people become poorer and thus they will be incited to commit more crimes. However, when we examine community sentences, I wonder whether that is true. I take the point that that might happen in the case of drug offences, which were mentioned by the noble Lord, Lord Windlesham. But community sentences are also imposed for violent assault. Assault is not a crime connected to poverty; it is connected to unacceptable behaviour. Other sentences are imposed for burglary, theft and motoring offences. Again, those offences have little to do with poverty but a great deal to do with law-breaking and lawlessness. If someone tears around an estate in a car he has stolen and does not have a licence to drive, that has little to do with poverty. I do not see why someone's propensity to commit crime will be increased--

Earl Russell: I think that the Minister has missed the point here. We are not here discussing the nature of the previous offence. We are concerned with whether the absence of benefit creates an extra incentive to crime.

Baroness Hollis of Heigham: That, of course, is precisely the kind of matter that will be reviewed in the pilot studies. We are not aiming for immediate implementation across the entire country should Parliament so agree. We shall run pilot schemes to see whether some of the concerns raised by noble Lords tonight are validated by the evidence. We shall examine whether a certain type of behaviour should be met by a sanction on benefit and whether that sanction leads to greater compliance with community sentences. That, I am sure, all noble Lords would wish to see.
	We hope that the existence of a sanction will mean that it will not have to be implemented very often. A clear message is to be given that benefit will be put at risk if the sentence is breached. It will be given by the court on sentencing and by the Probation Service both on first contact with the offender and after the first unacceptable failure to comply with the sentence. The sanction will not be invoked until the second offence. In my view, that will give offenders a strong incentive to comply with their sentences. It will focus their minds on the need to keep in touch with their probation officers, turn up for work and turn up to meetings in exactly the same way as they manage to turn up to sign on and collect their benefit. If they can sign on for benefit, they should be able to attend interviews with their probation officers. If, after a sanction, they feel compelled to commit further crimes, then, as now, they will face the full rigour of the law. There is no need for offenders to turn to crime as a result of these measures. All they have to do is to comply with their sentences.
	The noble Lords, Lord Windlesham and Lord Carlisle, suggested that the clear message behind these sanctions would not be received because offending is often unplanned and opportunistic and thus leads to a failure to keep to a community sentence. That suggests that there is nothing we can do to influence the behaviour of certain offenders. I do not accept that. I do not think that offenders who keep repeating their offending behaviour should use that behaviour as a form of blackmail in order to avoid sanctions to benefit.
	Indeed, that line is not acceptable to the Front Bench in the House of Commons. I was particularly interested in the remarks made by the noble Lord, Lord Higgins, in which he appeared to give rather greater weight to the views expressed by the citizens advice bureaux than to those of his own Front Bench in the other place. For example, Mr Eric Pickles, who leads for the Conservative Party on this Bill, stated,
	"I believe that the Government are doing the right thing".
	He continued,
	"If a person is in receipt of benefit, why should we have to shell out money so that person can defy a lawful order of the court? I am not in the business of funding people who break the law".
	He went on to say that if the provision did not work, we should tighten up the punishments further still.
	The noble Lord's honourable friend, Edward Leigh, who also served on the committee and is a trained lawyer, said:
	"The Government's action is absolutely right. There will be a tremendous cheer for what they are doing in the housing estates, where people are fed up with those who seem to have no idea that society is made not just by rights but by duties".
	That was the position of the Conservative Front Bench, who want to be strong, tough and vigilant in regard to crime--a position which I note was not shared by the noble Lord, Lord Higgins, in this debate.
	Certainty of outcome has been shown to improve compliance. A recent example is the home detention curfew system which has had a success rate of over 90 per cent. All the criminology that I was taught as a student makes the point that the certainty of either being caught or being punished--and there is an absolute certainty in this case as regards loss of benefit if there is a second offence or failure to comply with a community sentence--is far more effective than the severity of the sentence.
	As a result, I am confident that the Probation Service will operate the scheme in a professional manner. It will not want the measures in the Bill to fail in their deterrent effect as a result of any reluctance on its part to refer offenders to court. The more successful this measure is in encouraging compliance--and that is what the pilots should tell us--the fewer will be the cases that the Probation Service will have to refer to court, enabling it to use its resources to assist offenders to benefit from their sentences rather than on prosecuting breaches. Therefore, I hope that the Probation Service will see this as an important new weapon in its armoury to encourage offenders to comply with their sentences rather than as undermining any work that it may be doing with offenders.
	A second point made in this debate is that as a result, this provision affects not just the offender--and Members of the Committee may feel it appropriate that the offender should feel some hardship; after all, this is meant to bite on the offender--but that there could be a problem for the offender's dependants, possibly including a partner and children. The period of the benefit sanction is limited to four weeks. I do not believe that anyone would be made homeless as a result of such a sanction. I remind the Committee--

Earl Russell: I beg the Minister's pardon. Four weeks is for the pilot schemes; however, I understand that when the Bill is operative the period might be extended to 26 weeks.

Baroness Hollis of Heigham: In which case regulations would have to be made and it would be for your Lordships to debate them, as it would be for another place.
	I remind the Committee that employment-related sanctions and JSA already run for up to 26 weeks. We recognise that offenders with families may still decide to breach their sentence. For those receiving income support, which will include the majority of the most vulnerable people subject to these provisions, benefit will continue to be paid, albeit at a reduced rate, for the four-week period. In other words, we have in place a system of hardship payments broadly similar to that which has operated for many years in cases where employment-related sanctions are imposed. In extreme cases, to protect the position of dependants, payments of JSA, including hardship payments, may be split. If, for example, someone is vulnerable--responsible for a child, where the claimant or partner is disabled or pregnant, is a carer, has a chronic medical condition or has left care within the past three years--people do not have to wait a fortnight for the hardship payments; they can be paid immediately.
	I was asked about the consequences and the evaluation of this policy. It is subject to a subsequent amendment, but perhaps I may comment briefly. The experience of the pilots will determine much better than can speculation to what extent our hopes or the concerns expressed by Members of the Committee are realised. I shall say more about that in relation to the next amendment.
	The evaluation exercise will examine precisely the issues that have been raised, including crime levels, breaches, benefit claiming, jobseeking, as well as practical issues in relation to the different parties operating the sanction and the take-up of hardship provisions. We shall not extend the policy nation-wide before we have considered carefully the findings of the evaluation.
	In conclusion, this is a measure concerned with the conditions attached to benefit. To describe it as an extension of benefit conditionality rather than as punishment that offends justice is not simply being sophistical; it is a genuine difference of perspective, concerned with justice between the majority of members of society who, through their taxes, contribute to the support of people on benefit and those who repeatedly break community sentences, to the disturbance, harassment and often real grief of the areas in which they live, yet who none the less expect to be supported even though they fail to meet their obligations and act with impunity.
	I urge Members of the Committee to understand where the Government are coming from. I ask the Committee to appreciate the weight that will be carried by the pilots to see whether our hopes or the concerns expressed are realised. In the understanding of where the Government are coming from--namely, that we think it right and appropriate to attach these conditions to benefit if a community sentence is breached--I commend these clauses to the Committee.

Lord Windlesham: I shall be brief. In our adversarial system it is never easy to get governments to change course. Once legislative proposals have been announced and publicised--especially if they are aimed at the general public--and have passed through the House of Commons, it is unrealistic to suppose that they will be readily abandoned or even amended.
	It is the duty of this place to exercise some pressure and to bring to bear the weight of informed public opinion. Although a number of Government Back-Benchers spoke in support of the proposal, the debate was notable for the views of those with professional experience of dealing with offenders, sometimes a lifetime's experience, such as the noble Lord, Lord Christopher, on the Government Bench, the noble Baroness, Lady Stern, on the Cross-Benches, the noble Baroness, Lady Kennedy, on the Government Benches, and the noble Lord, Lord Dholakia, on the Liberal Democrat Benches. These are people who have given a large part of their working lives to dealing with offenders. Their comments were not put forward on the basis of assertion, or of party loyalty. It goes much deeper than that.
	In replying, the noble Baroness gave a forthright defence. It was an able defence, as we have come to expect from her. But every part of the proposal was defended and justified without any indication of giving consideration as to how it might be changed in some respect.

Baroness Hollis of Heigham: I apologise for intervening after having spoken for so long. Will the noble Lord not accept my point about pilots and their full evaluation before the scheme is unrolled? Is it not appropriate to see whether the proposal works, and whether the noble Lord's fears are validated?

Lord Windlesham: I take that for granted. The pilot scheme was part of the blueprint from the start. That is not a concession. It was part of the original design, and thank goodness it was. We shall await the results of the pilot scheme with interest.
	The noble Lords and I who put our names to the Motion do not intend to oppose the Question this evening that Clause 61 shall stand part of the Bill, nor the following clauses, Clauses 62 to 65. However, we shall certainly return to this matter again on Report. Unless the Government have a change of heart in the interval, the result may be very different.

Clause 61 agreed to.

Baroness Amos: I beg to move that the House be now resumed. In moving this Motion, I suggest that the Committee stage begin again not before 8.59 p.m.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.

Companies Act 1985 (Audit Exemption) (Amendment) Regulations 2000

Lord Sainsbury of Turville: rose to move, That the draft regulations laid before the House on 3rd May be approved [18th Report from the Joint Committee].

Lord Sainsbury of Turville: My Lords, I beg to move the Motion standing in my name on the Order Paper. As noble Lords may recall, my right honourable friend the Secretary of State for Trade and Industry announced to the House on 4th April proposals to change the existing law on the audit of companies' accounts. We are here today to debate the regulations which will give effect to those proposals. These regulations are made under the powers in Section 257 of the Companies Act 1985. The purpose is threefold. First, they raise the threshold for audit exemption from its current level of £350,000 to £1 million. The Government are concerned that the regulations placed on business are not overly burdensome, particularly on small businesses. Hence the regulations that we are debating today reduce those burdens.
	My right honourable friend made clear that the increase to £1 million is the first part of a two-step process. We were persuaded in the light of consultation that the balance of argument favoured moving the threshold for audit to the maximum turnover figure permitted under European rules; namely, £4.8 million. We made clear, however, that we wanted to move to this higher figure in the light of the proposals being developed by the independent Company Law Review. Specifically, the review is addressing whether some other less burdensome form of assurance might replace the full audit for companies with an annual turnover of between £1 million and £4.8 million. That is set out in the latest consultation document by the review, which was published in March. It is a question of weighing the costs and benefits of this "lighter" touch independent assurance. The Government have not taken a view on this as yet. The review will make its final recommendations to government in the spring of next year. We will then make a final decision.
	Secondly, the regulations simplify the law relating to dormant companies; namely, those which are still on the register at Companies House but have no significant accounting transactions during a period. They dispense with the requirement that dormant companies must pass a special resolution to gain exemption from audit, but they allow 10 per cent or more of shareholders to require an audit. They allow certain payments required of all companies to be made to Companies House while retaining dormant status. Thirdly, they require a dormant company acting as an agent for a third party to disclose its agency status in its annual accounts. There is little doubt that these proposals will be warmly welcomed by the business community because they get rid of burdens and remove unnecessary irritations, but I emphasise that the changes reflect a careful assessment of the relative costs and benefits.
	It may help if I provide a little explanation of how we reached our conclusions. I turn first to the increase in the threshold for audit exemption. The Companies Act 1967 introduced for the first time a requirement that all companies should not only file their accounts at Companies House but that those accounts should be accompanied by a report signed by a registered independent auditor. In the 1980s the then government on three occasions consulted on whether or not to keep the audit requirement for all companies. On each occasion it was decided to retain the status quo.
	The first cautious step was taken in 1993 with the exemption of very small private companies from audit, while those with a turnover of between £90,000 and £350,000 were given the option of filing a simpler report in place of the full audit report. This regime was considered unsatisfactory and abolished in 1997 so that only companies with a turnover above £350,000 are subject to a full statutory audit. That is the present position.
	We estimate that the increase in the threshold to £1 million will enable about another 150,000 companies to take advantage of exemption from audit. When my right honourable friend first proposed an increase, there were sharply differing estimates as to the cost of the statutory audit. For a company with a turnover at about the £1 million mark the cost ranged from £1,000 up to £5,000. The responses to the consultation suggest that the typical cost is around £1,200. Using that figure, our best estimate is that the potential savings for business are roughly £180 million in a full year. Some companies will, nevertheless, voluntarily continue to have their accounts audited; some will judge that they can make better use of specialist accountancy support; others may attach more importance to an overall reduction in their costs. The important point is that they will have the choice in the light of their own circumstances. The proposals do not change the existing safeguard for minority shareholders that 10 per cent of shareholders can require an audit.
	I turn more briefly to the changes to dormant company status. Section 250 of the Companies Act 1985 draws a distinction between those companies that are actively trading and those that are not. Some 170,000 companies have dormant status--often they are incorporated to protect a company or brand name--whose only purpose is to own an asset such as the freehold of a building. Many dormant companies are within groups and would not otherwise be eligible for audit exemption. In March last year the Government published a consultative document on the legislative framework for dormant companies which set out proposals to reduce the costs involved in running a dormant company. A large majority of respondents agreed with the proposals for simplification of the law.
	As to the proposals on "agent" companies, most respondents agreed that some action was needed to make it clear to a third party where a dormant company acted as an agent for another company. It is certainly legal to act in this way but it can be confusing or misleading to a third party. Just over half agreed with the proposal that companies acting as agents should be required to declare their agency status in annual reports.
	I hope it is clear from what I have said that wide consultation on these proposals has led to a package of measures that are practical and appropriate, relieve unnecessary burdens on smaller companies and have the broad support of the business community. In accordance with the undertaking given by my noble and learned friend the Attorney-General in November last year, in my view the amendments to the Companies Act proposed in these regulations are compatible with the European Convention on Human Rights.
	In our modern economy small companies are increasingly the vehicles for sustained economic growth and job creation. It is, therefore, vital that we reduce unnecessary burdens on these companies, and these regulations are a significant step in that direction. The regulations help to make an appropriate and equitable regulatory framework for business, and I commend them to the House.
	Moved, That the draft regulations laid before the House on 3rd May be approved [18th Report from the Joint Committee].--(Lord Sainsbury of Turville.)

Baroness Miller of Hendon: My Lords, I am pleased to inform the Minister that we welcome these regulations, as we do any steps that reduce the administrative burden and expense on small companies. It is perhaps right that I should remind your Lordships that I have previously declared an interest, having been a member of the Small Business Bureau. I am also a director and shareholder of a number of family companies which will certainly benefit from the reduction in the audit requirements. I am glad that, following a speech that I made early in my career in your Lordships' House, the fee for filing an annual return was reduced from £36 to £18 and has since been reduced still further to £15--a considerable benefit to small companies. Following a persistent campaign by the Small Business Bureau, the Registrar of Companies has greatly simplified the annual return.
	I regard the exemption from audit of companies with turnover of less than £1 million as another useful step in deregulation. It is likely to affect a very large number of companies, typically the small family business and the corner shop. The Government have claimed that this will save business some £180 million. That is a reduction on the figure of £500 million that they originally claimed. Both figures are disputed by the Institute of Chartered Accountants, but the theoretical saving is academic. Small companies will still require professional help because of their obligation to file statutory accounts at the Companies Registry.
	The next step along this particular branch of deregulation may be to abolish the need for small companies to file statutory accounts, which in practice are totally useless. In small companies the shareholders are very close to the management--usually they are the management--so that the statutory accounts are of no use to them. The period of several months until the end of the financial year that is allowed for filing accounts makes them useless for the protection of potential creditors. I also expect that professional accountancy assistance will be required by many small companies to enable them to prepare accounts for the inspector of taxes. Therefore, the actual saving may not prove to be as we thought. Nevertheless, we certainly welcome the change and the benefits that it will bring. It is perhaps only just because of the regulatory burden that the Government have imposed on SMEs, which is estimated to be £10 billion per annum.
	In a protest against working families' tax credit, the Institute of Chartered Accountants said:
	"There are many other burdens that seriously restrict the ability of SMEs to operate and grow for the benefit of employment and the economy generally. We urge the Government to act as quickly as possible to reduce these much heavier other burdens on business".
	We on this side of the House entirely agree.
	While we welcome the increased threshold, I have to record our mild disappointment that the Government have not bitten the bullet and increased the exemption up to the £4.8 million, the figure permitted under the European Union regulations, a step which has been endorsed by the Institute of Chartered Accountants.
	A further part of these new regulations is to alter the requirements for filing accounts by dormant companies which the Minister mentioned. Those accounts have already been greatly modified and are already simple. I assume that the Registrar of Companies may read this short debate. I should like, therefore, to take the opportunity to ask why dormant companies should have to file any accounts. The definition of a dormant company is one which has no significant transactions. There are some 170,000 companies with dormant status. Since there is no fee for filing their annual accounts, it is a burden on the Registrar of Companies to have to deal with them, to say nothing of chasing the many small companies which, by the very nature of their being dormant, fail to do so in time.
	We give a welcome to those steps which reduce the regulatory burden on business and we hope that in the very near future it will be followed by many similar steps.

Lord Sainsbury of Turville: My Lords, the major change to these regulations is undoubtedly the increase in the turnover threshold for audit from £350,000 to £1 million. It is a substantial change and offers an audit exemption to some 150,000 additional companies. When my right honourable friend the Secretary of State first floated such an idea about a year ago, it was seen by some as premature. Yet, a year on, roughly three-quarters of the 150 respondents to our consultation consider that the balance of argument favours raising the threshold at least to the £1 million, with many agreeing also that the second stage, moving to £4.8 million in the way I described, is also desirable.
	It is possible to criticise the change as being too timid or too bold. However, there are two powerful reasons for taking the matter in two stages. I have explained the link to the Company Law Review. We do not think that it is sensible simply to cut across a major element in that work. It is sensible to explore the idea of an independent professional review for those larger companies before making a second change. There are dangers in moving too far too fast; and I believe that taking this sizeable step now will enable us to assess the benefits.
	Dormant companies are required by European law to file their accounts.
	Finally, the question is not whether there is value in having an audit--for many companies that will remain the case--but whether it should be a statutory requirement for smaller companies. We have seen very little in responses to our consultation to show that the balance of costs and benefits points to retaining a statutory requirement which these regulations dispense with. The change will in many cases free up accountants working with small firms to work more positively and imaginatively to develop the business. I commend the regulations to the House.

On Question, Motion agreed to.

Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000

Lord Sainsbury of Turville: rose to move, That the draft regulations laid before the House on 3rd May be approved [18th Report from the Joint Committee].

Lord Sainsbury of Turville: My Lords, the Government are strongly committed to providing fair minimum standards without imposing unnecessary burdens on business. The part-time work regulations are an important building block in this agenda. The measures announced on 3rd May, and due to come into force on 1st July, will ensure that part-time workers are protected against unjustified discrimination. They have an important role to play in protecting part-timers while opening up new part-time opportunities, and encouraging people to return to the job market part-time.
	The basic aim of the regulations is simple: to make it unlawful for employers to treat part-timers less favourably than comparable full-timers. This will ensure that part-timers have a right to receive the same treatment as comparable full-timers. This includes the same hourly rate of pay as comparable full-timers; the same access to occupational pension schemes; the same access to training; the same entitlement to annual leave as well as parental and maternity leave on a pro rata basis as comparable full-timers.
	Once the regulations come into force, part-timers could be treated less favourably only where this treatment can be objectively justified. In all their terms and conditions, part-timers will have a right to be valued just as highly as their full-time colleagues.
	The regulations are only part of the Government's campaign to promote part-time work. The Government will build on these legislative foundations with a programme of information. This will provide more information on the legal position as well as providing examples of best practice. The first part of this programme has already been published on the DTI's part-time work web page. The programme will be rolled out over the next few months in consultation with interested parties.
	The Government have created the right framework for a flexible and fair approach to part-time work. We have listened to the concerns expressed in the consultation process, and amended our measures where necessary. We believe that we have struck the right balance between regulation and best practice guidance. I commend the regulations to the House.
	Moved, That the draft regulations laid before the House on 3rd May be approved [18th Report from the Joint Committee].--(Lord Sainsbury of Turville.)

Baroness Miller of Hendon: My Lords, these regulations are being introduced as part of the Social Chapter that Labour hastily and recklessly signed up to as soon as the Prime Minister stepped through the door of No. 10 three years ago.
	Labour signed up to the part-time workers directive on 7th April 1998. But despite having had two full years to implement the measure it had humiliatingly to ask for an extension of time on 7th April this year. Perhaps that is not so surprising because the Secretary of State had a dress rehearsal for his speech on the order on 10th May. Where was that? It was on the BBC, where most government statements seem to be made these days. The information he gave to his listeners was at variance with everyone else's understanding of the proposals and implied that many more workers would benefit than is the case.
	The Secretary of State had to be publicly corrected by the TUC, whose spokesperson said:
	"Poor Mr Byers, his head must have been softened by a strenuous week".
	My honourable friend, the Member for Tiverton and Honiton, requested Madam Speaker to try to get the order withdrawn until the Secretary of State knew exactly what the order was about, and that was refused, presumably on the ground that it is not necessary for a Minister to understand the legislation he is introducing.
	I have to assume that part of the delay in introducing this order--apart from the time it has taken to explain it to the Secretary of State--may have been as a result of the haggling that has been going on with the unions. Employers who may have to familiarise themselves with the new regime will have had less than what may be regarded as a decent period to do so because of the Government's dithering. On the other hand, I have no doubt that the unions with their massive resources and their fingerprints all over the document will be well prepared to deal with it.
	I turn to the contents. Fortunately the Government have seen sense. Under Regulation 2 the comparison of part-time workers is going to have to be like with like; that is, between workers with the same type of contract. So without an identical contract a part-time worker cannot claim parity with a permanent employee and claim a pension, sick pay and the like. We congratulate the Government on having resisted the demands that part-time workers for whom there was no direct comparison in the same firm should compare themselves with a hypothetical worker instead. What a feast that would have provided for the lawyers.
	Nevertheless, the Government have again failed to resist the temptation to gold plate the already burdensome EC regulations. Despite the original directive entitling member states to exclude part-time casual workers, the Government have not seen fit to do so. The European directive gave member states the opportunity to opt out of applying it to casual workers. Our Government have seen fit to impose this voluntary burden on business. Agency workers are also included. One National Health Service trust has complained that that will push up the cost of hiring agency nurses and care workers. Part-timers employed by the NHS already have the same rights as full-timers. As with the working time directive, the regulation will simply swallow up more of NHS funds.
	However, we believe that the worst and most blatant piece of gold plating is the requirement that within 21 days an employer must give an employee who thinks that he or she has been treated less favourably a written statement in order to justify himself. Failure to do so gives rise to an inference that there has been unfair treatment. The statement itself is to be treated as evidence against the employer but not against the employee.
	Nowhere in the EC regulations is there a requirement for a written statement, which a prudent employer would probably be well advised to have his lawyers draft for him. In any case, the employee already has a right to go to the employment tribunal for protection. It is absolutely no use the Prime Minister sanctimoniously lecturing the other member states of the EU that they should conduct themselves more like the USA when it comes to business regulation, when his Government lose no opportunity to pile more and more regulation and expense on our industry and apply the most rigorous and bureaucratic interpretation of every edict that comes from Brussels.
	Finally, I want to quote from the Government's Regulatory Impact Assessment.
	"We do not believe that there is widespread unfavourable treatment of part time employees. Job satisfaction amongst part time workers is higher than among full time workers. The 1998 Workplace Employment Relations Survey found that part time employees were much more likely to regard themselves as fairly treated than were full time employees; 61 % compared with 45%".
	Like the CBI, the Opposition support the principle of giving part-time and full-time workers the same pay and conditions on a pro rata basis. The CBI believes that most employers already do so. Part-time employees are a valuable segment of the workforce, especially to smaller employers who may not need or be able to afford full-timers. These regulations, while on the face of it being for the benefit of part-time workers, are likely to lessen their employment prospects and damage small business.
	I wonder whether the Minister will clarify one point. I am sorry that I was unable to give him notice of it, but the matter was brought to my attention only late in the afternoon. The Official Report of the other place was late in printing due to the burden of work. At col. 9, the honourable Member for St Ives commented on press speculation that the European judgment on part-time workers entitled to occupational schemes could cost the Exchequer up to £17 billion because of the way it would work retrospectively.
	When the matter was debated in the other place, the Minister said in reply that that was an extremely valuable point and at col. 20 he said that it was an important point. But, having read the rest of his reply, I am not sure whether it was likely to cost up to £17 billion. It would be helpful if the Minister could give me an answer today or in writing. I apologise for the delay in mentioning the matter.
	I return to the regulations before us. The assessment of the extra burden that this piece of legislation alone will impose on businesses is, in using the Government's own figures, £27.4 million. We on this side of the House are not happy with the regulations, first, because of the extra cost and, secondly, because of the gold plating in the written statement that I mentioned; the inclusion of casual and agency workers.
	However, reluctantly and in accordance with the custom of your Lordships' House, we shall not oppose the passage of the regulations, although we believe that they may put a hard burden on businesses.

Lord Lea of Crondall: I declare an interest, having been part of the origin of the negotiations. Perhaps I may remind the House how the Social Chapter works. Ten years ago, a framework agreement in Brussels meant that all the European trade unions and employers were able to come together to deal with the matters in the social action programme. We can take some satisfaction from the fact that this is the third such measure to come before Parliament after a number of years of negotiation in Brussels.
	When the Labour Government signed the Social Chapter, to the regret of the Conservative Party, they were in a position to catch up on some of the matters that had taken time in Brussels. In that process, some of the topics have reached this Parliament in a tight timetable. However, the House should take confidence from the fact that the broad framework was agreed by the CBI, which is part of the European Employers Federation. It is therefore reasonable to infer that this is a modest proposal in a series dealing with atypical work.
	We ought to reflect on the fact that during recent months we have had many debates in this House about the rapidly changing nature of the labour markets. What is in Brussels jargon called "atypical" work--part-time work, fixed-term contract work and agency work--is in some industries becoming typical work. Therefore such employees need to be covered pro rata and these regulations are a modest way of dealing with the problem.
	It is worth making the point that of the 6 million part-time workers in Britain, 80 per cent are women. In recent years it has been most difficult to deal with such problems by way of collective agreement, and the regulation is a half-way house between a detailed statutory scheme and a collective agreement. It was written in the form of a collective agreement in Brussels and it was signed by the trade unions and employers in Brussels. If five or six years ago people in this country or in any other part of Europe had said that many of these issues would be the subject of successful framework collective agreements in Brussels, it would have been thought most unlikely. A great deal of progress has been made and because of the way in which the matter was handled in Brussels there is a preparedness in industry to take this step forward at this stage. If we had made the move on our own, we would have been open to the charge that we would have lost competitiveness and so forth.
	The measure means that we are operating on a level playing field in Brussels. We are not losing competitiveness against any other European country; we are going forward together. These high standards for part-time workers will stand us in good stead of integrating atypical workers into the labour force. I am pleased therefore to associate myself with the regulations before the House tonight.

Baroness Miller of Hendon: My Lords, I ought to make one point to the noble Lord, who has spoken so eloquently on what he believes to be the correct position. I made the point that the timing was difficult because small businesses have only six weeks to ensure that they get it right. The noble Lord mentioned that the CBI was involved in the timing structure. Originally, businesses were given two years from 7th April 1998, but they had to have an extension. The regulations must be implemented in only six weeks' time, on 10th May. I do not know how many small businesses the CBI represents--it usually talks about big businesses--but I know that for those which do not employ many people in their personnel and accounts departments implementation will be difficult.
	The other point that I wish to make is that we do not object at all to the EU directive as such. We object to the gold plating on the objective. When one talks about competitiveness, as did the noble Lord, it does not help us to be competitive when it is made more difficult for employers in this country than it is for those in the rest of Europe. That is the point that I was making.

Lord Pearson of Rannoch: My Lords, before the Minister rises to reply, perhaps I may also say to the noble Lord who has just spoken that it may well be that by these arrangements we do not lose competitiveness with our so-called partners or competitors in Europe. However, of course, we do lose competitiveness with, shall we say, the United States of America, the recovering markets in the Far East and the rest of the world. This is another classic example of EU harmonisation bringing us into line with the sclerotic and declining European market and, in doing so, damaging us in our competition and trade with the rest of the world.

Lord Sainsbury of Turville: My Lords, I believe that the Government's measures on part-time work will ensure that Britain's 6 million part-timers are no longer treated as second-class citizens. In response to the last speaker, perhaps I may say that most businesses, particularly in the service area, have been well ahead on this issue for a long time. It is now well appreciated that part-time workers are an absolutely essential and important part of the workforce and therefore should not be treated as second-class citizens. I would argue strongly that an important part of competitiveness is having a part-time workforce who believe that they are treated fairly and not as second-class citizens.
	So far as delay is concerned, we took slightly longer than the regulatory right, although we are allowed a slightly longer period. That seemed to me to be correct in terms of getting the regulations absolutely right, and I believe that several other EU members have taken more time in the same way as the UK have done.
	So far as concerns the question of casual and agency workers, I believe that there is a misunderstanding as to how the employment status is defined. Some casuals are employees, some are workers, and the same argument applies with regard to agency workers. If we were simply to exclude workers, that would increase enormously the scope for legal action to determine the legal status of individuals.
	So far as concerns the written statement, it seems to me to be a simple case of good practice that everyone should be agreed about the facts before legal action is started. If there is a case for objective justification, that should be put down. I cannot believe that that simple process, which would seem to be good practice and potentially could stop legal actions being taken, is in any way harmful.
	The noble Baroness, Lady Miller, raised the rather complicated question of occupational pensions. A decision was taken by the European Court on 16th May that UK legislation, which places a two-year restriction on claims for backdated contributions in respect of occupational pensions, is not compatible with European law. That means that claims for employer contributions from part-timers who were denied access to occupational pension schemes could go back as far as 1976, which was the date of the earlier ECJ ruling. That, of course, is in relation to other rights. So far as concerns this measure, rights begin to accumulate only now. Clearly, this particular point will not impact for two years and we shall review the situation during that period. If it is incompatible with European law, we shall examine that and amend it accordingly.
	I believe that the point behind the regulations is that part-time work has become important and will be increasingly important in the years ahead. All businesses knew that the legislation was imminent and had plenty of time to prepare for it. I believe that the Government have set the right framework for a flexible and fair approach to part-time work. I commend the proposals to the House.

Lord Pearson of Rannoch: My Lords, I wish to press the Minister on what he has just said, particularly with regard to pensions. I believe that to some extent he echoed what his honourable friend, the amazingly titled Minister for Competitiveness in the other place, Mr Alan Johnson, said in Standing Committee last Thursday, 18th May. Like the Minister, Mr Johnson appeared to be uncertain as to the effect of the backdating of pensions, possibly to 1976, under the European diktats.
	Therefore, in the first instance I ask the Minister to give the House an absolutely clear assurance that the figure of £17 billion which has been put upon this aspect of the problem is absolutely not accurate, that it will not happen and that we need not worry about it any more.
	Secondly, when he says that the new regulations will not bite for two years and that no one can make a claim until they have been operating for a period of time--in other words, that it will not be until the year 2002 that any court could rule that someone is entitled even to two years' retrospection, which is what I believe the noble Lord said--can we have some idea of the cost of that? It may not be £17 billion, but if we are looking at these regulations introducing that prospect, then what will the cost be of two years' retrospective pension which may then be applied? Is that figure included in the £27.4 million, which I believe is the figure that the Government have already put on these regulations, or is that extra? And who will pay the retrospective pensions for the two years which may be adjudged in the year 2002? And who will pay the £17 billion, if we come to that?

Lord Sainsbury of Turville: My Lords, I make it clear that the £17 billion does not in any way relate to the regulations that we are debating tonight. So far as concerns the regulations under discussion tonight, a question would arise with regard to backdating only if people failed to be paid what, under this legislation, it was their right to be paid. However, it is hardly likely that there will be a failure to do that. But, if they failed to be paid what was due to them under the legislation, then of course the amount would depend entirely on how many people failed to receive the rights that they have under this legislation for whatever period. This is backdating for a right for which people have not been paid. Therefore, it depends entirely on the extent to which they have not been paid. Therefore, at this stage it is not possible, even remotely, to say what that would be.
	So far as concerns the £17 billion, that figure is not accurate. Our figures are much lower than that; £4 billion is probably closer to the figure. However, we need to examine that in more detail.

On Question, Motion agreed to.

National Minimum Wage (Increase in Development Rate for Young Workers) Regulations 2000

Lord Sainsbury of Turville: rose to move, That the draft regulations laid before the House on 4th May be approved.

Lord Sainsbury of Turville: My Lords, I have great pleasure today in presenting to your Lordships these important regulations, which build further on one of the Government's most successful policies: the introduction of a national minimum wage.
	As the House will know, we asked the Low Pay Commission to monitor the effect of the national minimum wage during its first few months in operation and to report its findings to us. This it did, and we published its second report, and our responses to it, on 15th February this year.
	The commission's report revealed the extent of the success of the minimum wage policy, showing that well over 1.5 million workers are now entitled to higher pay as a result of the national minimum wage and that the majority of them are receiving their entitlement. Women and part-time workers have been particular beneficiaries. All this has been achieved without any indication of significant adverse effect on employment or the economy.
	It is the light of the Low Pay Commission's positive findings that we are able to accept the suggestion, made by the commission in their first report, that the minimum wage rate for those aged 18-21 should increase from £3 per hour to £3.20 per hour from 1 June 2000. The regulations before us put this rise into effect. The main rate for the minimum wage will also be increased this year from £3.60 per hour to £3.70 per hour, with the change to take place on 1 October 2000, and further regulations will be brought before the House in due course to achieve this.
	We are aware of strong feelings in some quarters that there should be one rate for all adult workers--that is, every worker aged 18 or above. However, one of the reasons why the minimum wage has been so smoothly and successfully introduced lies in our cautious approach.
	We knew from the results of surveys in other countries which have minimum wage legislation that, where minimum wages do impact in a negative way on employment, this effect is felt most keenly by younger age groups. This fact alone gave us reason enough to proceed with caution. We are also concerned that the minimum wage should support rather than hinder training and education.
	I think you will agree that the introduction of a totally new policy was not a time for throwing caution to the wind and introducing rates which look generous on paper but whose effects might be disastrous. This point applies with additional force when we consider that we are dealing here with young people who are entering the labour market for the first time and whose whole future may turn on how quickly they can find suitable employment at the outset of their working lives. People looking for their first job should not be priced out of the market. That is the context in which the development rate for young people needs to be understood.
	We now know from the Low Pay Commission's report that, in respect of young people, the minimum wage has meant a pay rise for tens of thousands of them while not affecting their employment opportunities. This entirely vindicates the cautious approach we have adopted.
	Of course, our actions on the minimum wage are based on the advice we receive from the Low Pay Commission, which, let us not forget, is a balanced body with membership drawn from the CBI, small and large businesses as well as trade unions and academic specialists. The Commission, in its turn, bases the advice it gives on its wide-ranging consultations and fact-finding exercises. It is because of this partnership approach, involving as many of those concerned as possible, that we can be sure that the rates we set represent the greatest improvement for workers compatible with affordability for individual employers and the United Kingdom economy as a whole.
	With your Lordships' indulgence, I will briefly touch on the closely related question of where the line is to be drawn between the youth rate and the adult rate. Our actions are based on the Low Pay Commission's recommendations, but we are not obliged to accept each and every suggestion it makes. So it is that, notwithstanding the commission's advice, at present 21 year-olds are included in the lower range. The issue is being kept under constant review. As we have announced, we are asking the Low Pay Commission to continue to monitor the minimum wage and produce a further report including advice on whether there is a case for any further increase in the rates and, if so, to what level, and to do that by July 2001 so that any increase can take place in October 2001. As part of the same exercise, we have asked the Commission to look not only at the youth rate as a whole but, in particular, to continue monitoring the present 21 year-old cut-off so that a decision on that issue can be made at the same time.
	To sum up, the important facts are these. This is a rise in the minimum hourly rate which represents a percentage increase of 6.67 per cent, 20p an hour, and will make a real difference to some 150,000 young people. It will achieve this with a minimal cost to business, less than one hundredth of one per cent of the total wage bill. I therefore commend these regulations to the House.

Moved, That the draft regulations laid before the House on 4th May be approved.--(Lord Sainsbury of Turville)

Baroness Miller of Hendon: My Lords, this regulation is intended to increase the national minimum wage for young workers between 18 and 21 years of age from £3 to £3.20 an hour, an increase of 6¼ per cent since the national minimum wage was introduced only just a year ago. That is an increase for every employee of £8 a week based on a 40-hour week. Their older colleagues will get an increase from £3.60 to £3.70--that is, 2.7 per cent from next October. That is an increase of £4 a week based also on a 40-hour week.
	I have to assume that this is part of the policy of the Government to reduce the differential between older and younger workers to zero, even though their stated reason for the differential was to reduce the adverse effect of the national minimum wage on the employment prospects of younger workers, especially those who may have left school with minimal academic qualifications.
	The Minister for Competitiveness in the other place spoke of,
	"Introducing rates that look generous on paper, but the effects of which might be disastrous in reality, particularly for young people entering the labour market for the first time".
	He went on to say--and I think the Minister gave a precis of what I have as a quote--
	"We know from surveys on minimum wage legislation in other countries, that when rates have a negative impact on employment, their effect is felt most keenly by younger age groups".
	I am glad to hear a minister at least conceding that, in some circumstances, the national minimum wage could have an adverse effect on employment. In this case, the Government are relying on the advice of the Low Wage Commission, which is very good.
	It is true to say that, so far, the effect of the national minimum wage has apparently had only isolated adverse effects on employment, but this could be due to the strength of the golden economy that we bequeathed to the Government just three years ago.
	I am glad to see the Minister telling the Standing Committee in the other place--and indeed it was repeated by the Minister here--that the Low Pay Commission is to continue to monitor the national minimum wage. Its present conclusions are based on only nine months of such study. What is regrettable is that the Commission's report does not cover the effect of the national minimum wage or its effect on perhaps individual trades--one or two like catering are suffering--or regions.
	While the Bill was passing through your Lordships' House, I asked the Government to accept entirely discretionary powers to make variations in the national minimum wage should any of those factors, vis-a-vis individual trades or regions, actually appear at the time to be relevant. Of course, the Government refused to do that.
	Despite the fact that these aspects are not now by law allowed to be considered in fixing the national minimum wage, I hope that the Low Pay Commission would be allowed in due course to monitor these and to report on them every time they report to the DTI on the effect of the national minimum wage, as they did for younger workers.
	I hope the Government will take into account the possible effect on the employment of young people in the small businesses that employ the majority of them before they seek any further increases. However, from what the Minister has already said, I think it is highly unlikely that they will do so without taking proper advice and considering all these aspects which the Minister is clearly aware of himself.

Lord Sainsbury of Turville: The Low Pay Commission originally recommended that £3.20 per hour should be introduced in April 1999. On the basis of caution, we did delay so that it came in at this time and that was always part of the plan. I stress that this is a national minimum wage. It is the minimum we think people should be paid. If one has a national minimum wage, I do not think it should be varied either by trade or by sector. No points have been raised by the Low Pay Commission, who could certainly have done so, to say that there are particular sectors where this is really giving problems. I do not think that would be in the spirit of saying that this is a national minimum wage. It is extremely important to set this minimum and I very much commend this change to the House.

On Question, Motion agreed to.

Code of Practice: Access to Workers during Recognition and Derecognition Ballots

Lord Sainsbury of Turville: rose to move, That the draft Code of Practice laid before the House on 8th May be approved.

Lord Sainsbury of Turville: My Lords, this draft code of practice forms part of the statutory recognition procedure laid down in Section 1 and Schedule 1 of the Employment Relations Act 1999. These provisions of the Act will come into force on 6th June.
	The statutory procedure provides for ballots to be held by the Central Arbitration Committee (the CAC) in certain circumstances to ascertain the level of support for union recognition among workers in the relevant bargaining group. The statute provides also for derecognition ballots to be held. The ballots can be held by post, at the workplace or by a combination of those two methods.
	It is important that those ballots are held fairly and properly. The statute therefore places various duties on the employers to ensure the orderly functioning of the balloting process. Paragraph 26 of Schedule 1 places three duties on employers who are involved in recognition ballots. Paragraph 118 lays down identical duties in respect of derecognition ballots.
	The three duties can be summarised as follows. First, there is a general duty on the employer to co-operate with the union or unions involved and to co-operate with the person appointed by the CAC to conduct the ballot. Secondly, the employer must provide the CAC with the names and home addresses of the workers involved. Thirdly, the employer must give the union,
	"such access to the workers constituting the bargaining unit as is reasonable to enable the union to inform the workers of the object of the ballot and to seek their support and their opinions on the issues involved".
	The interpretation of what constitutes "reasonable access" in practice is obviously a vital matter. The schedule therefore expressly provides for the Secretary of State to issue a code of practice concerning this third duty using his powers under Section 204 of the Trade Union and Labour Relations (Consolidation) Act 1992.
	The code before the House is designed to provide practical guidance to employers, unions and the CAC on what is meant by reasonable access. The code can be taken into account by the CAC if it is asked to determine complaints made by unions that they have been denied reasonable access.
	We undertook detailed consultations before producing this draft code. We took the opinion of ACAS. We also informally consulted the CBI, TUC and other interested parties. Those prior discussions culminated in the publication in February of a consultation document containing an earlier draft of the code. We received over 70 responses. The draft before us today incorporates many points and revisions which consultees suggested.
	This code provides invaluable guidance to all concerned. Recognition and derecognition ballots are potential areas of conflict. The code of practice is drafted in that knowledge. It gives helpful guidance to minimise the scope for conflict over a key aspect of the balloting process. It is fair, workable and sufficiently flexible to cater for individual circumstances. I commend it to the House. I beg to move.

Moved, That the draft code of practice laid before the House on 8th May be approved.--(Lord Sainsbury of Turville.)

Baroness Miller of Hendon: My Lords, we are discussing here the draft code of practice designed to implement the procedures set out in Section 1 and Schedule 1 of the Employment Relations Act 1999. That section and schedule and the code of practice will be the means of imposing trade union recognition on firms with more than 20 employees.
	Apart from defining or changing the so-called "bargaining unit", the schedule also protects the workers against detriment or dismissal for exercising their rights under the schedule, and provides the procedures for derecognition, which I suppose is only fair.
	It is worth noting that the liability to the recognition procedures kicks in for firms employing as few as 21 workers. That is despite the fact that during the passage of the Bill we tried to reason with the Government and to persuade them to make the starting point 50 employees, which was and still is in line with the EC definition of a "small" firm. That is more gold-plating.
	During the passage of that Bill, the Government also refused to exclude directors and shareholders from the head count, thus running the risk of catching small family firms in the net.
	During the passage of the Bill, the schedule grew from 26 pages containing 88 paragraphs to a massive 60 pages containing 172 paragraphs. All those additions were as a result of government amendments which were designed to accommodate constructive suggestions made by unions, employers and others, which only shows how poor the Government's brief for the original legislation was for it to have to grow in that way. It was 172 paragraphs. The Ten Commandments contain only 16 paragraphs.
	The vast majority of Acts passed by Parliament are shorter than the massive set of procedures that quite small firms are supposed to assimilate and observe. The procedures are especially difficult for small firms, particularly as regards access to employees and at the place of work.
	A TUC survey called "Focus on Recognition" published in January 2000 reported that 75 deals were signed in the 10 months between January and October 1999 and claimed that that was the highest number ever. Four out of 10 unions reported their belief that the impending statutory recognition rights had been influential in encouraging employers to set up voluntary arrangements before the complicated statutory procedures come into force. I am inclined to agree that that is probably what happened. It may very well be that the complications and potential disruption of the procedures is one of the reasons that there has been such a spate of voluntary recognition agreements since the Act was passed.
	The general purpose of the code of practice, as stated in the introduction, is to give what it calls "practical guidance" about the issues that can arise when an employer receives a request from a union for access to his workers at the workplace and/or during normal working hours.
	Paragraph 10 says that the code wants to encourage responsible behaviour by both parties--that is, the employer and the union--and that this should avoid any acrimony. In that spirit, and in the hope that the code will indeed achieve those aims, we on this side of the House will not oppose this measure and we wish it success in its aim of not prejudicing industrial relations.

Lord Wedderburn of Charlton: My Lords, I thank the Minister for explaining the code and for presenting it to the House. I congratulate the Minister and the Government on the care that went into preparing both the code of practice and Schedule 1. What criticisms there would have been had they left out a number of essential paragraphs.
	We are discussing a code which deals with a trade union's right to have reasonable access to workers who are about to vote in a recognition ballot. Less than that would obviously be quite unfair. Therefore, by definition, the problems arise only when the employer is resisting collective bargaining. Therefore, the code deals with the abnormal, rather than the normal, case because I believe that when the Act is fully operational, most employers will make arrangements with appropriate unions for consultation and bargaining.
	But for other employers, the procedures which we are discussing and the code will apply in a context of protracted disagreement between those parties. The code of practice seeks the very desirable aim--and I want to stress that, in view of my subsequent remarks--of the parties finding agreement on the ways in which the right of union access is to be implemented. That may be a demanding task but it is an extremely desirable target.
	I am well aware too that the Government have consulted many parties, including the TUC and the CBI. But such unpublished travaux preparatoires will not be seen by the courts or by the CAC. The Minister's words in Hansard today are, therefore, of very great importance.
	I offer two comments to the Minister. First, the code purports, as it should, to set out broadly the legal structure bequeathed by the 1999 Act; and so it does, except in one rather important point, and since this might be thought to be a legal point, I gave my noble friend notice of it. It refers to the question of the sanctions where an employer has failed in his duty--here, the duty to accept reasonable access--and where an order of the CAC has been made to him to fulfil his obligations but that has not been done.
	At this point in the procedure the Act provides differently for the recognition procedure from the derecognition procedure. In paragraph 49, especially, the code does not avert to that. In both cases the CAC has a discretionary power either to grant recognition or not to derecognise. That is a discretion. In the derecognition procedure, a further sanction is attached that the order of the CAC can be,
	"recorded in the county court"--
	and--
	"enforced in the same way as an order of that court",
	with all the possibilities of contempt of court thereby entailed.
	This is not a trivial point. It could be extremely important in regard to an employer--no doubt a rare one--who sets out to defy the order of the CAC. There was a different procedure in the derecognition area which was common to both halves of the schedule, as it were, when the Bill was first printed. That is something that is not understood in many quarters and it would be desirable if the code could say something about it, at least in its second edition.
	My second point is that there are various places where the draft code may go rather further than a document that is merely to be taken into account without creating new rights and obligations. That is partly a matter of style. With great respect, the draftsman is not accustomed to setting down trade union rights; he is more used to trade union immunities. Perhaps the style could be improved by looking at the codes and rules of our partners on the Continent, such as union rights in the Italian workers' statute of 1970. The statutory right of the union is to,
	"such access to the workers constituting the bargaining unit as is reasonable to enable the union ... to inform the workers of the object of the ballot and to seek their support and their opinions on the issues involved".
	Of course, it will be beneficial and valuable if the union and the employer can agree on the details of the access process, but the right of reasonable access does not depend, as such, upon the agreement of the employer. Occasionally, the code gives a different impression. For instance, it suggests that the employer will reasonably want to give prior permission before union officials enter his workplace and talk to his workers. With respect, the exercise of the statutory right of reasonable access has nothing to do, either in theory or in practice, with the employer's prior permission, although, of course, it may be unreasonable if the union rejects the employer's suggestions.
	The code also says:
	"The parties will need to establish agreed limits on the duration and frequency of the union's activities".
	In my respectful submission, that is the addition of a new right. There is no need whatever for the parties to agree upon the limits, and so on, for access. There is a need for the union to demand only reasonable access. Whether or not there is an agreement with the employer, a union may well, in a state where relations are not particularly good, demand access on terms which the CAC finds to be reasonable.
	The code goes further into prescriptive detail, such as that,
	"the employer should allow the union to hold one meeting of at least 30 minutes in duration for every 10 days of the access period".
	That is perilously close to creating rules that are not merely interpretative of the schedule. Sometimes the code's theory is not quite matched by its prescriptions. It says that workers must not be exposed to "intimidation or threat", which is a desirable addition to the text. But later it suddenly imposes a positive duty on the union to "dissociate" itself from any anonymous material and if that material favours recognition to,
	"formally repudiate it, informing all the workers in the bargaining unit accordingly".
	Everyone knows that anonymous documents are produced in industrial disputes. Sometimes, perhaps often, they are produced in the face of what workers feel is intimidation by management. I ask my noble friend whether in the second edition he can look at this aspect. There is no reason at all why the union should be made to repudiate a document that may involve facts of some importance. In my view, this paragraph of the code may well risk being beyond the competence and may be ultra vires. However, the draft code is to be welcomed, and in my submission, welcomed in the context of the fact that it applies only in the 20 days of the ballot period. There may well be times when we want to look at the pattern of industrial relations when we think that access should be extended to a time rather anterior to those days, but that is another story.

Lord Sainsbury of Turville: My Lords, I well remember the discussion with the noble Baroness, Lady Miller, about the number of employees. She passionately defended the fact that it should be 50, but we settled on 20, which is the basis of this discussion. I am delighted that the noble Baroness agrees that every effort should be made to provide a framework to reduce acrimony in these difficult circumstances.
	I thank the noble Lord, Lord Wedderburn, for raising his point with me beforehand as it was not one on which I had focused in any great detail. There is a discrepancy between the procedures that can follow in a recognition and a derecognition situation. That is because where the derecognition is asked for by the workers, the position that the company may take is not clear. In that case, the matter could go both ways, whereas in the other circumstance, when the company asks for derecognition, or the company opposes recognition, the company's position is quite clear. In this specialised case it is not, and that is the reason for the difference on this issue.
	I take my noble friend's point about the style and we will look at that in relation to a second edition. On that basis I commend the code of practice to the House.

On Question, Motion agreed to.

Child Support, Pensions and Social Security Bill

House again in Committee.
	Clause 62 [Loss of joint-claim jobseeker's allowance]:

Baroness Hollis of Heigham: moved Amendment No. 176A:
	Page 68, line 12, at end insert--
	("(3A) The Secretary of State may by regulations provide in relation to cases to which subsection (2) would otherwise apply that joint-claim jobseeker's allowance shall be payable in a couple's case, during the whole or a part of so much of the prescribed period as falls within paragraph (a) or (b) of that subsection, as if one or more of the following applied--
	(a) the rate of the allowance were such reduced rate as may be prescribed;
	(b) the allowance were payable only if there is compliance by each of the members of the couple with such obligations with respect to the provision of information as may be imposed by the regulations;
	(c) the allowance were payable only if the circumstances are otherwise such as may be prescribed.").

Baroness Hollis of Heigham: Amendment No. 176A corrects a drafting error in the Bill. It provides for hardship payments to be made to couples who would have been entitled to a joint-claim jobseeker's allowance but for the application of a community sentence sanction to both members, or a community sentence sanction to one member and an employment-related sanction to the other. In those cases, we wish to ensure that JSA hardship payments can be made, as would be the case in the event of both members of the joint-claim couple being subject to employment sanctions. In cases where one member of the couple is subject to a community sentence sanction the Bill, as drafted, already allows for both reduced rate payments of JSA and hardship payments to be made; in other words, it is entirely benign.
	It has always been our intention that joint-claim couples who are subject to community sentence sanctions should have the protection of hardship payments. But the Bill as drafted does not achieve our intention. This amendment puts into place powers similar to those in Section 20B of the Jobseekers Act, which enables hardship payments to be made to joint-claim couples in the event of both of them being subject to an employment sanction.
	We intend to use these powers to make regulations that will enable hardship payments to be made to members of joint claim couples along similar lines to couples who are subject to employment sanctions. I beg to move.

On Question, amendment agreed to.
	Clause 62, as amended, agreed to.
	Clause 63 [Information provision]:
	[Amendments Nos. 177 and 178 not moved.]
	Clause 63 agreed to.
	Clause 64 [Loss of benefit regulations]:
	[Amendments Nos. 179 and 179A not moved.]
	Clause 64 agreed to.
	Clause 65 agreed to.

Earl Russell: moved Amendment No. 180:
	After Clause 65, insert the following new clause--
	:TITLE3:("Payment of benefit
	:TITLE3:Manner of payment of benefit not restricted to automated credit transfer
	. In section 5(1) of the Social Security Administration Act 1992, at the end of paragraph (i) there is inserted ", but the regulations may not require automated credit transfer to be the only manner of paying a benefit.".").

Earl Russell: On Amendment No. 180 I decided, after a little thought, that I ought to declare an interest. My local post office, Brondesbury Post Office in Kilburn High Road, was moderately severely damaged in a fire several months ago. The builder's yard which was the source of the fire is now more or less repaired and just about ready to open again. There is no sign even of any preparatory work on the repair of the post office.
	A number of my neighbours are now speculating that the fire may have been used as an excuse to withdraw the services of that post office. Since those services were already under such pressure that on many occasions the queues out of the post office stretched across the road and blocked the pavement, it is doubtful whether the neighbouring sub-post offices, which are some way away, could take the strain. Since that causes me moderately strong feelings, I felt it was proper for me to declare an interest.
	It also reminds us that, though we are primarily concerned with rural post offices, we should never forget that the same strains which are placed on rural post offices are often placed on post offices in unfavoured areas which also happen to be urban. Those problems deserve equal consideration.
	The effect of Amendment No. 180--it is one moved by my honourable friends in another place--is to preserve the right to receive benefit at a post office rather than having to transfer to ACT. The present legal position, according to my honourable friend Mr Kirkwood, who was chairman of the Select Committee, rests on regulation 21 of the Social Security Claims and Payments Regulations 1987. That requires payment by ACT to be a consensual act; in other words, it cannot happen unless both parties agree. The purpose of the amendment would be to make it require primary legislation to reverse that. It would not make it irreversible; but it would mean that it could only be reversed by a measure which could be brought before Parliament on which we would have an opportunity to vote.
	As my honourable friend Mr Kirkwood remarked, if the Government were to repeal that regulation without providing a new income stream for the Post Office, that would have the effect of killing the sub-post offices. There has been a good deal of speculation about what is the Government's intention. I think that it is likely that the Government's intention has changed somewhat behind a smoke screen. I should like to know a little more about that as we go along.
	What worries us is that the Department of Social Security says that it has plans to save £400 million by the switch to ACT. As we understand it, that sort of saving would not be achieved unless the switch were very nearly total.
	Not for the first time, I express misgivings about the effect of the Change programme--the 25 per cent reduction in administrative costs--on the working of the Department of Social Security. At the time, Mr Peter Lilley expressed the view that that change filled him with despair. I understand very well why Mr Lilley said that, and I think that this may perhaps be an example of the despair he then felt.
	The importance of the Post Office in any small community is immense. Over the Easter Recess I had some opportunity to listen to voters. I found that the issue of the Post Office, along with the issue of rural buses, ranked on a level with pensions among those issues which caused concern among the electorate. This is something to which, in a democracy, we really must listen.
	I am reminded of a story dating back to the golden age when Hugh Fraser was owner of Harrods. He was visiting a remote Scottish village and was taken to the village shop. The woman who ran the village shop asked him what he did and he said, "I've got a shop too". She started asking him questions about its size and the range of goods it stocked, and her face started to drop like a stone--until it suddenly lit up and she said, "Och, but ye'll no have the Post Office"! That is a real example of what the Post Office actually means in a small village.
	For a great many people on benefit banks are not a particularly adequate alternative. The services of banks are not really designed for people who are on benefit. I remember one story which came to me from CAB sources, which puts this in a nutshell. A woman on income support had got used to running down her bank account to the last few pence at the end of each week. They miscalculated her account, calculated that she had gone into overdraft and imposed a £10 overdraft charge on her. She wrote and protested at this. They admitted the error, but then charged her £10 for writing her the letter in which they admitted that they were in error. She therefore went back into overdraft and, having no overdraft facility, was unable to buy any food.
	That is why banks are not designed to be suited to people on benefit. Any community banking facility that may be laid on in any future arrangement for the benefit of people who want to have a bank account would have to take account of such needs.
	I understand that the Government are now considering new schemes and new possibilities, but we do not yet know what those are. An amendment which has been tabled to the Postal Services Bill, on which the noble Baroness, Lady Byford, may have more to say, states that the Secretary of State "may" provide a scheme which will provide alternative facilities. I reread that amendment about five minutes ago, probably for the 10th time. I cannot say that it is extremely clear to me exactly what the Secretary of State may do. He may do something in particular; he may do it very well or he may not. I remind the Minister of the debate we had a few moments ago about the importance of doing something while the Bill is in this House. When there is not a Bill before us, we do not have any purchasing power.
	It may be that this scheme will be perfectly adequate. I hope so. The Minister deserves the benefit of a favourable interpretation on that. On the other hand, I am sure that she understands the importance of the principle of belt and braces, although I cannot follow the noble Lord, Lord Rix, and claim that this is something of which I have some professional knowledge!

Baroness Hollis of Heigham: Not only the noble Earl, but most women do not have such professional knowledge either.

Earl Russell: I thank the Minister for that point, though it is now rather more normal than it was for women to attend this House in trousers, and I am glad to see it!
	However, as regards the main principle, we should like an assurance that we have some purchase on the situation, just in case the scheme does not work out as we would wish. Ministers are at the mercy of events at all times. So an intention that is perfectly good now might not prove to be so good after the next economic blizzard--indeed, one day, this year, next year or sometime in the future, there will inevitably be another. Therefore, we need this security. We can achieve that either through the amendment tabled in the name of the noble Lord, Lord Higgins, or through this one. We may even achieve it through some composite amendment upon which we may agree in the future. But, one way or another, we need the purchase. I beg to move.

Lord Higgins: It has been a constant theme of our debates that matters which normally fall under the social security remit are being taken over by the Treasury. This is yet another example of the Treasury carrying through its policy regardless of the social consequences.
	There are two amendments in this group. Amendment No. 180, which the noble Earl just moved, suggests that,
	"the regulations may not require automated credit transfer to be the only manner of paying a benefit".
	If that were to be accepted, the noble Earl suggested that primary legislation would be needed to alter the situation.
	Our amendment, Amendment No. 181, is rather different and tackles the problem from the other end. It says that the system will be all right,
	"providing that the regulations ensure that payments may continue to be made by the same method as that employed on the date of commencement of this Act".
	In the light of this debate, we may, as the noble Earl suggested, wish to get together and decide what the best format would be. But that will depend on the Minister's forthcoming answer in which she may persuade us that this is no longer necessary.
	In our view, the decision by the Government to move to a system of automated credit transfer threatens the future of at least one-third of sub-post offices; indeed, the number may be something over 18,000. A substantial part of the revenue of post offices derives from the income that they receive as a result of dispersing various social security benefits. The previous government made a suggestion for overcoming this problem in a form that would--it was hoped--help to maintain the sub-post office network while, at the same time, facilitating the payment of cash through the post office. The Government abandoned that so-called "Horizon Project", but we remain totally unclear and puzzled about what they propose to put in its place.
	I have some sympathy with the views expressed by the noble Earl on the question of banking services. He suggested that they are not suitable for many people on social security benefits. In some ways, banks are not suitable for people generally. Some years ago when I was chair of the Treasury Select Committee, we carried out an investigation into bank charges. The then chairman of Barclays Bank appeared before us and managed to sustain a defence of his position for some two hours. However, right at the end of the process, we asked him how he made sure that he received payment of those excessive charges. He replied, "We've already got the money". That was rather typical of the attitude that was prevalent at that time and which, to some extent, is still prevalent now.
	In reality, many people who receive social security benefits are not well suited to arranging their financial affairs through banks which, as the noble Earl rightly pointed out, may well impose quite heavy charges on them. Indeed, in the context of someone on income support, that may prove to be quite a substantial amount of the income that he or she receives from the Government. Some people are not used to working through the banking system and have a real preference for receiving their money in cash; for example, from the "order book", which is frequently used. However, as has already been pointed out, the proposed new system will also have an effect on the whole structure of post offices and the important role that they play in the communities which they serve. Indeed, my noble friend Lady Byford may wish to say more on the subject.
	We seek a response on two matters this evening. There have been a number of exchanges at Question Time and on other occasions across the Floor of the Chamber with regard to the Government's position on these matters. First, it appears to be difficult to get across to the Minister people's worries on this issue. People rightly want to receive their benefits in cash. The Minister has said that they will continue to receive them in cash. However, she has not at any time explained how this is to be achieved. We are ever hopeful that she will tell us this. The Government have considered this matter for a long time. It is no good just saying that benefits will be paid in cash without saying how that will be achieved.
	Secondly, I understand that post offices are under a legal obligation to fulfil their universal service obligation with regard to certain services, for example, registered post and the delivery of parcels weighing up to 20 kilos. We are not at all clear whether post offices will fulfil that universal service obligation if their number is significantly diminished. It clearly is not just a question of fulfilling that universal service obligation at one point. Post offices must fulfil that obligation over a reasonable geographical spread of the country.
	I also seek clarification on my next point. I understand that in responding to a recent debate in another place the Minister concerned seemed to indicate that there was to be some form of compensation or alternative payment to post offices to enable them to continue to survive. Generally speaking, post offices comprise small businesses and the people who run them may well have invested their life savings in them. However, if the Government's present proposals are implemented, and these amendments, or something like them, are not accepted, people who run post offices may no longer be able to continue in business and may suffer considerably as a result. These are not unimportant issues. We hope at the very least for some clarification from the Minister this evening. We hope to be given a helpful response.

Baroness Gale: The noble Earl, Lord Russell, remarked on the immense importance of small post offices. I think we all agree with that. However, the Government regard as outdated the present method of payment of benefits by order books and giro cheques. We must consider new and more secure methods of payment. The payment of benefits by automated credit transfer will not begin until 2003. Some fears have been expressed with regard to the Government's proposals. Some people fear that they will be unable to collect their pensions or benefits from the post office. However, this fear has been addressed. The Government will ensure that people who wish to do so can collect their benefits and pensions at the post office and can receive payment in cash. Another fear is that rural post offices--

Lord Higgins: Has the noble Baroness any idea how that will be done?

Baroness Hollis of Heigham: I am happy to try to spell that out to the noble Lord in due course. I do not think that it is reasonable to ask someone other than myself that question at this point.

Lord Higgins: I do not understand why that is the case. The noble Baroness, Lady Gale, has asserted that payment will be made in cash. I asked the simple question: how will that be done? I think that is a reasonable question to ask someone who is asserting that all will be well.

Baroness Gale: I repeat that those who wish to receive their benefits in cash will receive them in cash. I am sure that my noble friend the Minister will explain how that will be done.
	Another fear expressed is that rural post offices--and also post offices in isolated areas--will close as a result of the new measures. However, that will not occur because post offices will still act as access points for the collection of pensions and benefits. The benefits of the new method far outweigh any disadvantages. For example, ACT will clearly assist in the elimination of fraud. The flexibility as regards the collection of payment will also assist people. Many thousands of people already use this method. The Government's proposals will bring about a more efficient and secure system of payment and, by the time that it is fully implemented, it will be seen as a sensible measure. I believe that these are practical proposals fit for the 21st century.

Baroness Byford: I thank the noble Earl, Lord Russell, and my noble friend Lord Higgins for their amendments. The Committee will be relieved to hear that I shall not go through all of the arguments that I put forward earlier in Committee. However, there are some issues that I wish to raise at this stage.
	Both noble Lords are right to refer to the role that post offices will play in the future payment of benefits. Although the Minister was nodding her head and saying, "Yes, they will be paid in cash"--which I accept--that is not part of my argument. However, I shall return to that issue later.
	I, too, acknowledge that although the problem concerns predominantly rural areas, some urban areas are also feeling the squeeze, if you like, as far as concerns payment of benefits.
	Earlier in Committee, I referred to the fact that some 2 million people are "unbanked". The Minister acknowledged that. We also discussed the kind of system there will be and my noble friend asked how people will receive their money. I hope that the Minister will enlarge upon that matter when she responds. I have offered her little morsels in an attempt to extract from her how payments will be made, and painfully, painfully, painfully, we seem to be getting there.
	In fairness to the Committee, I should say that, following our last debate, the Minister wrote to me on 16th May. In her letter she stated that,
	"The precise means of doing so will be a matter for the Post Office and the banks. However, we expect available options to include withdrawing money through a bankcard"--
	which is something my noble friends may not know--
	"being swiped through the new 'Horizon' computer terminals currently being installed in post offices".
	If that is so, my first question to the Minister is how does that differ from the system proposed by the previous government. I suggested that payments would be made by means of a Smart card, but the Minister denied that. However, her letter states that there may well be a "bankcard". Call it what you will; it seems to me that we are going back to the previous government's proposals and starting all over again. Perhaps the Minister will bring me up to date when she responds.
	There are, of course, cost implications involved in such a system. It was suggested originally that the system proposed by the previous government was too expensive. This Government wish to do away with books and giros and so on, but obviously people will need some form of identification. We perhaps reached this stage previously in Committee. Members of the Committee were asking how people would identify themselves in order to receive cash, a facility that the Minister said would still be available. Perhaps the Minister will be able to clear up that query when she responds; I am still a little unclear. There will obviously be cash implications if a bank card is going to be used and, if books are no longer required, it may make a difference to one or two of the amendments which have been tabled today. We may wish to consider that matter and come back to it at the next stage.
	Perhaps I may move on to one or two other matters. We discussed social banking provision for some of the 2 million "unbanked" people. Several questions arise from that. First, what do the Government think will be the cost? Secondly, who will bear that cost; who will pay it? Will it be the Government, the Post Office or the banks--or all of them? Certainly it was mentioned in the correspondence that I have received recently from Barclays Bank that one of its people is arranging a presentation, and that in that presentation he quite rightly refers to the cost of such provision, saying:
	"The potential cost to banks of opening and operating these accounts is an interesting question. We certainly do not expect to make any profit from them, indeed a loss is a real possibility".
	It was agreed that an average balance of around £1,000 a year is needed to make a bank account profitable. Clearly, we would not expect to see that level of credit balance maintained by the kind of people about whom we are talking. He acknowledged that there is a cost, and someone must bear that cost somewhere along the line. Perhaps the Minister will touch on that point when she comes to reply.
	Since my previous contribution on the first day of Committee I have had a letter from the Alliance & Leicester stating that it had noted my mention of increased or compulsory ACT. The Alliance & Leicester has been lobbying the Government very hard against that as it greatly impacts on Giro and the POCL's commercial objectives. As two of the major banks have expressed concern on this matter, I hope that the Minister will be able to say that something has happened since the previous debate.
	Other noble Lords have referred to the fact that people need to have access to cash. I have been looking at the Select Committee report on the rural White Paper, although I do not expect the Minister to have seen it or indeed to have studied it. On page 18 of the report the committee referred to benefit payments through post offices. The committee stated:
	"The Government must move rapidly to reconfirm that individuals will continue to receive benefit payments through the Post Office and that any loss of income to the Post Office brought about by the changing pattern of payments should be offset by additional opportunities to gain custom".
	Indeed, during our exchanges two weeks ago, the noble Baroness stated the other advantages. I accept that. The committee went on to state:
	"We fear that if they do not do so there will be a loss of some rural post offices".
	This is a matter of great concern. It is not just my concern. It is a concern to those who will draw the payments and to the banks and others involved. It is an important issue and one where there is uncertainty. I should like greater clarification from the Minister when she comes to reply.
	Perhaps I may pose some questions to the Minister in summing up my thoughts on the issue. If recipients do not wish to have their payments made through banks, how will they be paid? Will they be made through the card, or do the Government have other options in mind? If recipients have such an account and then run up an overdraft, what will the position be? Will the Government cover them? Is the social bank to be limited to the payment of welfare benefits, or will recipients be allowed to develop their bank account into a normal bank account, whereby some will be in credit and others will have overdrafts? For those who want to claim in that way and may not want to receive payment through the post office, how will those who do not qualify to be banked get over the whole question of being banked?

Baroness Hollis of Heigham: I do not understand that last question. The noble Baroness asked how, if people are not qualified to be banked, they will be banked. Who would not qualify to be banked, apart possibly from a bankrupt?

Baroness Byford: I thank the noble Baroness. I know that several people have applied to banks to be banked and the bank will not bank them. Therefore, they are not clients because the bank will not take them on as a risk. With the new measures put forward by the noble Baroness, that will not be a difficulty. Currently, banks do not take on everyone who applies for banking facilities. That is what I was trying to convey, perhaps not very well for which I apologise. How will the Government deal with the whole question of homeless people who apply for banking facilities or come to the social bank?
	My next point touches on what my noble friend said earlier. At the moment, post offices handle all of these welfare benefits. Is it the intention of the Government that sub-post offices, part-time post offices, Crown post offices or even newly created post offices will deal with them? Will there be universal coverage? Again, I should like some clarification on that point. Lastly, will the Government forbid banks to charge at any time for the provision of basic banking services? Obviously, when banks offer services, most people are charged for that work.
	These are important practical issues. I accept the Minister's assurance that claimants will be able to draw cash from post offices. However, for Members on these Benches and, indeed, on the Liberal Democrat Benches, questions still remain as regards the nitty-gritty of the arrangements. When I raised this matter two weeks ago, I was told that the Government were waiting for the PIU report. It was due to be published at Easter. That date slipped to May and I understand that publication may now be delayed until June or even September. Given the issues raised in our earlier debates on war pensions, I feel that this is another area where we wish to be absolutely clear on the detail before the Bill leaves this House.
	Some noble Lords may wonder why I worry so much about these basic issues. I shall repeat what I said two weeks ago on the matter. When families get into difficulties, in particular when they break down, mothers left caring for children feel more secure when they know that they can go to the post office to claim their cash benefits. That is extremely important to them. Although it has been suggested that a form of social banking will be established for the whole family, some mothers will be hesitant about arrangements where the facilities for collecting cash for themselves and their children are moved to a joint bank account. It may be that at that moment their partners are people whom they do not and cannot trust in that respect. I urge the Government to consider this carefully.
	I appreciate that the arrangements are not due to come into effect until 2003. However, as my noble friend mentioned earlier, post offices are small businesses and those who manage them need to plan for the future. I do not doubt the Minister's sincerity in her assurances that universal coverage will be achieved, but it is important to be clear on what will be put in place for small post offices during the intervening period. It has been suggested that subsidies will be paid. The Minister has already mentioned that provision. However, when I had discussions with a group of sub-postmasters two weeks ago, it was clear that, although they were pleased to learn that a subsidy would be paid, they knew that that would only be a short-term, stop-gap measure. Can the Minister enlarge on future plans for small post offices?
	Sub-postmasters have also expressed concern about the management of the new systems by local authorities. Local authorities vary and may well interpret the regulations differently. What criteria will be set out to determine which post offices should receive the subsidy?
	This is a complicated area and I apologise to the Minister for having put so many questions to her. However, she has kindly moved a step further forward since this matter was last raised by saying that the Government are considering the issue of a bank card. Perhaps she can take us even further tonight.

Baroness Pitkeathley: We are debating two issues here: first, that of benefits being paid by automatic credit transfer; and, secondly, the future of rural post offices. The two are not necessarily inter-related, although, as the former chair of a rural community council and the current president of one, I am fully aware of the problems faced by rural post offices.
	As regards the issue of ACT, we need to understand how matters are progressing in this area. I believe that every year half a million people are choosing to transfer to this method of receiving benefit payments. Although many of the points made by the noble Baroness, Lady Byford, as regards access and so forth are without doubt true, so, too, is the issue of fraud and the cost of making giro payments. I seem to remember that half my working life as a social worker was spent chasing the giro that had not been paid, the giro that had been sent to the wrong address, or the payment book that had gone astray, with equal distress for the kind of families referred to by the noble Baroness. As I understand it, no one is to be forced to have his or her benefits paid by automatic credit transfer. I remember being in the Gallery of the House of Commons and hearing the Prime Minister say that this would not happen and that people could continue to be paid weekly or monthly as they wished.
	As to the question of post offices--to which I feel a strong commitment, given my connection with the rural community council--I do not think that we should be too circumscribed in our view of the future of rural post offices or post offices in isolated areas. Given the opportunities that are opened up by electronic links, post offices can be the source of information for communities through e-mail, the Internet and so on. We should be unwise to take too limited a view; namely, that a change in the method of benefit payment would automatically have the effect on post offices that some noble Lords have suggested. We should think of the other opportunities that are being opened up to them at the same time.

Lord Hylton: The noble Baroness, Lady Pitkeathley, has opened up a fascinating prospect for existing post offices and sub-post offices in the electronic age. That will take some time to become effective and to present a real source of income for those who are presently running those post offices. I take the view that we cannot afford to lose any more sub-post offices, certainly not in rural areas, and to some extent in urban areas. That is why I support the general principles of both amendments. I strongly agree with many of the points made by the noble Baroness, Lady Byford.
	In the part of Somerset where I live, we have already lost a large number of post offices. Those that continue are often hanging on by the skin of their teeth and working on the narrowest of margins. The sub-postmaster's salary is often critically important.
	Perhaps I may comment on the social uses of post offices, which go beyond their immediate functions and utility for the payment and receipt of benefits, for example. In my village we have a church and a pub, but we have no post office. The post office used to perform functions which neither the pub nor the church can effectively perform, because post offices are more accessible. You do not have to belong to the drinking set, or the religious set. They offer much more neutral ground and are valuable for that reason.
	I understand that it is already possible, where towns qualify for the single regeneration budget, for credit unions to be promoted under that heading. Besides being valuable in their own right, they could spill over from a given town to its neighbouring villages. That could also provide a form of work in which those who are currently sub-postmasters could be effectively and usefully engaged. I hope that in this critical interim period, when we are trying to preserve the post offices that we have, the possibility of working credit unions into the whole scheme of things will be examined carefully by the Government.

The Lord Bishop of Hereford: I rise briefly to express strong support for the principle which I believe lies behind both amendments. However, I am not sure that the wording of either amendment meets the problem. The amendment of the noble Earl, Lord Russell, opens up the possibility that payment may not be by automated credit transfer, but it is not beyond the Government's ingenuity to think of another method of payment that is equally unacceptable. Simply to outlaw that particular means of payment is not wholly safe. If we are not talking about "belt and braces", perhaps the noble Baroness prefers "elastic and safety pins".

Baroness Hollis of Heigham: I cannot believe that the right reverend Prelate teases us at this late hour.

The Lord Bishop of Hereford: I apologise. The amendment in the name of the noble Lord, Lord Higgins, is also a hostage to fortune since we do not know when the legislation will come into force. Therefore, there is something amiss with both amendments. The principle behind them which has been eloquently expressed is that we must have cash payments not only for the benefit and peace of mind of people of very modest means, who depend on post offices and are used to operating a totally cash economy, but also for the benefit of the post offices themselves. The noble Lord, Lord Hylton, pointed out the critical importance of a post office in rural areas. If cash payments are not made the money is not recycled over the counter in the payment of council tax, water rates, television licences, telephone and electricity bills, the stamps on which people depend, and so on. People receive their cash in benefits and pay it back over the counter which is business for the post office. It is also business for the shop which is frequently integrated with the small post office. There is a critical economic mass which depends on those cash payments. We should like to receive an assurance from the Minister that cash payments will continue beyond 2003 indefinitely for those who want them. If we must have a card, can it please be referred to as a post office card without the word "bank"?

Baroness Hollis of Heigham: The last suggestion of the right reverend Prelate is excellent and I commend it to my colleagues. Post offices play a vital role in the community, especially in rural areas where there may be few other shops or services. As the right reverend Prelate said, payments in cash may be essential in order to keep afloat whatever other services are available. They are also particularly important for elderly people.
	The noble Lord, Lord Hylton, interlocked the debate with credit unions and made some interesting comments. My understanding is that in the UK about 500,000 people are involved in credit unions. That represents about 1 per cent of the population, compared with about 30 per cent in the United States. Credit unions tend to be based on the workplace; that is, people in work in a reasonably tight area. Therefore, perhaps they have not translated as well into rural areas. The noble Lord did not mention the alternative of LETS--labour or time exchange schemes--which may perhaps be more appropriate in rural settings.
	To return to post offices, my noble friend Lady Pitkeathley made the point very well that the post office has been in decline for years. Over the past 25 years some 20 per cent of the network has closed. Each year some 500,000 people, either through a death or coming new to the service, choose not to be paid through the post office but by ACT; in other words, each year that number of people decide not to use the post office. One thinks of the two major universal benefits which reach almost all families, retirement pension and child benefit. Just under 50 per cent of new pensioners, who are obviously the backbone of the post office network, choose to be paid by ACT, and 54 per cent of new child benefit applicants receive their payments through ACT. That is not surprising because 93 per cent of those who are retired have either a current or savings bank account, as do 98 per cent of the employed, 84 per cent of the unemployed, 87 per cent of those who receive child benefit, and so on. I could continue the statistics.
	This means that benefit and pension recipients already vote with their feet. Even if the DSS did nothing whatever the post office network would continue to shrink, and probably at an accelerating rate, across the country. That is why I hope the Committee will accept that this problem is independent of the actions of the DSS. It is important that whatever the DSS does in no way accelerates that decline but that post offices, it is hoped, see this as an opportunity which will keep them afloat for the decades to come. That is why we are taking steps to protect the network. For example, we are investing nearly £500 million in the Horizon system which will computerise post offices.
	The noble Baroness, Lady Byford, asked whether it will be universal. Yes, every post office will be online over the next year even if they are not on electricity. We shall do more if necessary. For example, we have added a new clause to the Postal Services Bill in another place which would allow a subsidy to be paid should it be needed. That is the point of the word "may". It is an important move showing the good will of the Government towards post offices and a recognition by Government of the importance of post offices to rural and deprived inner-urban communities.
	However, I should like to argue strongly--the more I engage in debate on the issue, the more persuaded I am of the Government's position on this--that we shall not do the Post Office or the taxpayers any favour by continuing with order books and giro books. They are outdated, expensive to administer and open to fraud. We have to find a new way forward. The Government will do what they can. But the Post Office also must take responsibility and help to find new business. It must stop treating this as a threat and start treating it as an opportunity. One such opportunity is the universal bank which I shall describe more fully in a moment.
	In addition, post offices may well have, I hope, a role in delivering government services by becoming a government gateway for all central and local government services through a single point of access. There are many other opportunities for diversification.
	Amendments Nos. 180 and 181 are designed to retain the current paper-based method of payment. It would mean that people would be able to continue to opt for payment by giro book and order book from 2003 rather than have benefit paid directly into their bank or building society account.
	We have announced that payment by automated credit transfer will be the norm for paying benefits from 2003. The transfer to ACT will be completed by 2005. However, those who wish to continue to collect their cash at post offices will still be able to do so before and after the change in 2003. We should remember why we are making the change. The current system belongs to the days of ration books. If we were starting again today no one would invent a system where one has a book of paper which can be taken by anyone, changed by anyone, used at only one outlet--it cannot be used if an individual goes away on holiday, or stays with a daughter 50 miles away--and which can be easily mislaid and damaged. If we sought to change from a payment card of some kind--I shall describe it later--to a paper-based system which anyone can manipulate fraudulently, where one carries an order book and queues for an hour or 40 minutes waiting for it to be stamped--an order book which anyone can use and which can easily be lost and so on--and where one has to take out the entire amount whether or not one wants it, the Committee would be in uproar. No one would now invent that system as a method of paying benefit. Its days are long past. The issue should have been tackled a long time ago.
	Peter Lilley stated on 12th April:
	"I recognised that the process of distributing benefits by order books was one of the most costly, inefficient and fraud-prone ways of delivering money".--[Official Report, Commons, 12/4/00; col. 62WH]
	Across the world, the equivalent of the DSS is using ACT to deliver its benefits. France, Germany, Italy, Spain and other countries are either required or heavily encouraged to use that form of payment. It is safe, convenient and efficient. It uses tried and tested technology already chosen by over a third of recipients of benefits to access their accounts. It reduces the cost. We should not be embarrassed by that. Every ACT transactions costs only a penny compared with the overall costs of 54p every time an order book foil is presented and £1.36 per giro cashed. One cannot argue that we should continue to spend £1.36 as taxpayers rather than 1p a transaction in order to keep small businesses afloat. There may be need--we have the powers under the Bill--for a targeted subsidy, but not a generalised subsidy through an expensive method of payment such as we currently have. It also makes the system more secure against fraud.

Lord Higgins: I am grateful to the noble Baroness for allowing me to intervene. The noble Baroness refers to a targeted subsidy. It is implicit in that remark that the Government have in mind a certain number and spread of post offices; otherwise I do not see how they will target the subsidy.

Baroness Hollis of Heigham: By "targeted subsidy" I meant that if, for example, one has an expensive method of paying benefit, all post offices, postmasters and sub-postmasters receive some of that through form of income. They may need it or they may not in order to keep the system afloat. I repeat that the powers taken in the Postal Services Bill indicate that we recognise that some post offices may need particular help--and in that case, the Government and POCL will reflect on that--as opposed to the generalised help of paying through a costly, inefficient and fraud-prone system. I meant nothing more specific than that.
	At this stage, I do not have information to show whether the subsidy may be necessary and if so what its size or criteria may be. Such issues will be developed in subsequent discussions with POCL if and when the need arises.

Lord Higgins: Surely, when the noble Baroness uses the word "necessary" it is implicit that the Government have a view on whether they want to keep a certain number of post offices in business. I understand that that will be the object of the subsidy.

Baroness Hollis of Heigham: No Government can guarantee that any form of subsidy will keep all the existing network afloat. After all, each year we have seen the closure of 200 post offices. As the noble Lord will know, half of all postmasters and postmistresses are over the age of 50. Often, it is a late-stage career run alongside a pension. If when that person decides to take full retirement no one is willing to take over the post office, or if it has been cross-subsidised from the person's pension from a previous job, the post office may fold. It is not necessarily a responsibility of government to equate that.
	The Government have made it clear that they want to see the post office network protected and, in terms of services, enhanced. I do not want to be drawn into a discussion on where, how much, if, when, to whom, what numbers and by what criteria any possible subsidy may go. I was trying to assure the noble Lord and the Committee that, by taking the power in the Postal Services Bill, the Government have gone a long way towards meeting some of the real, understandable concerns that have been represented to us by sub-postmasters.
	A second advantage of the new system will be to tackle fraud. We lose more than £100 million a year from the instrument of payment fraud. Giro and order books are lost, stolen and manipulated. In 1998-99, there were some 800 million encashments by order books and giro. That is the size of the activity and it is easy to see how it can lend itself to simple forms of expensive fraud.
	The move to ACT also helps to promote financial inclusion. That was mentioned by the noble Baroness, Lady Byford. Having a bank or building society gives people access to a wider range of services, such as direct debit facilities, which make it cheaper to pay bills. For example, you can save up to £50 a year on utility bills. It also gives people access to mainstream borrowing facilities.
	I ask your Lordships to take the point seriously. Encouraging people to remain with a ration-book system for accessing their benefits means that they can access almost no other financial services. If you want to write a cheque to pay a bill, you have to use a friend to do so. If you want to cash a cheque that has been sent to you, you have to go to a cheque changing shop and perhaps lose 5 or 10 per cent of its value. If you want to buy an item--perhaps to replace a bed or cooker--by instalments, you cannot use direct debit. You may instead have to buy through a catalogue at APR rates of 20 per cent or more. That is to say nothing about having to have recourse to pawn shops and money lenders.
	I have seen all the research on this subject--there have been about four pieces in the past 18 months--and it shows a huge unmet need for secure, inexpensive and accessible financial services for those who are currently "unbanked", to use the noble Baroness's phrase, from paying bills to obtaining insurance.
	On numerous occasions, we have made it clear that people will still be able to collect their cash at post offices both before and after the move to paying benefits by ACT in 2003. Three possible routes will enable people to collect their cash and they are not mutually exclusive. The first is network banking. Horizon, the programme to install online computer facilities, will be completed by the end of the year. It will offer potential for the Post Office to extend its arrangements with the high street banks. It has a solid foundation on which to build, only 5 per cent of rural parishes currently have a bank branch. Most major banks have between 1,500 and 2,000 outlets compared with the Post Office which has more than 18,000 outlets and in 50 per cent of parishes. The Post Office already has arrangements with Girobank, the Alliance & Leicester, Lloyds TSB, Barclays and the Co-operative Bank--and I believe that it is also talking to NatWest at the moment--to provide the banking facilities for them as their agent. That has enabled network banking, with all its associated services, to return to rural areas where the banks disappeared years ago.
	The second mode of payment is cash machines. The Post Office has announced that some 3,000 cash machines will be installed by the end of 2001, many of them in rural post offices. In many rural areas, residents must now travel miles to the nearest town in order to draw cash and they spend it there, rather than, as the right reverend Prelate said, in the local village.
	Thirdly, the development of a universal bank, which I mentioned earlier, could be available to all the 18,000 post offices currently in the network. Therefore, that is far more generous in its scope than the current banking facilities offered by the main clearing banks in this country.
	The vast majority of benefit recipients--as I said earlier, over 80 per cent--already have access to a bank method and increasingly they are choosing that method for payment to be made. Equally, the development of a universal bank through the Post Office could offer an alternative. Effectively, it would be a post office bank for those who are apprehensive about using more traditional banking facilities. However, we recognise that some people will simply be unable to use ACT. For those people we are considering what alternative, simple, electronic money transition systems, which could also be accessed at post offices, may be commercially available.
	The primary method that we are considering is payment through a universal bank by virtue, as the noble Baroness described, of the equivalent of what she and I might call a Switch card. A Switch-type card or a banking card could be used to access money at the Post Office's universal bank and, what is more, unlike now, to have access to it at any post office in the country. One could draw as much or as little of one's benefit as one wished, unlike the current order book system under which one must draw all the benefit. It would be infinitely more convenient, infinitely cheaper and infinitely safer.
	The noble Baroness asked what would be the difference between a bank card and the original smartcard that was envisaged. As I understand it, the original smartcard had to be abandoned because it drew on expensive new technology, was three years behind contract and was many millions of pounds over budget. However, I believe that the proposals for it would have encoded, so to speak, the money available on to the card. It would have drawn money from the card rather than the card being used to gain access to a Post Office account.
	How would such a card be acquired? As I said, we would expect people to use a bank card. If they did not already have one, they would obtain one by using exactly the same method of identification as they do now when establishing their entitlement to benefit in the first place. They might use information from a driving licence, a local authority red card, a passport, a birth certificate, a wage slip or trade union membership card; in other words, under these proposals the type of identification that sets up their benefit entitlement in the first place and delivers them the order book should be sufficient to establish their identity in order to acquire a bank card which will then allow them to access money from their account held by the Post Office into which their benefit is paid.
	I hope that that answers the noble Lord's questions. As I say, many people will use the 3,000 machines; others will use their own banks through the Post Office's proxy; and others, I believe, will have access to or will use the universal bank.
	I was asked about bank charges. We recognise that people expect to be able to withdraw their money without incurring charges for doing so. We are discussing that issue with the banks in order to ensure that that happens. I do not believe that questions were raised about payment patterns. Therefore, I shall leave that matter today.
	Some Members of the Committee have been concerned about security; for example, when money has to be paid by a third party because someone is frail or disabled. As now, people can make power of attorney arrangements, they can arrange a third-party mandate with a bank, or they can provide another person with a signed letter of authority. That is not very different from cashing an order book now.
	I do not deny that a number of details must be sorted out, but the move to ACT is still three years away. One reason that we have taken time on this matter is to ensure that all the necessary arrangements are in place and comfortable.
	I was asked by the noble Lord, Lord Higgins, about the universal service obligation. As I understand it, the universal service obligation comprises daily mail deliveries to every postal address, a uniform tariff rate for inland mail and a nationwide network of post offices, but this has not been specified in terms of numbers. The Government will establish access criteria for post office counter services in the light of the PIU report and consultations with interested parties.
	It has been accepted in the other place that ACT is an appropriate way forward or, as an alternative, a universal bank with access through a bank card or the equivalent to a switch type card, provided we can ensure that people can obtain cash as and when they need it in the way most convenient to them. I repeat that, every year, we are losing 500,000 people to ACT methods. ACT methods have been running since 1983. I am not aware that they have generated any problems. Post offices have traditionally relied on the elderly and so on for paper book, ration book payments. That generation is leaving us and the new generation coming through is preferring to use ACT. We have to move to an efficient and secure method of paying benefits. It is extraordinary that we would conceive that people would wish to continue using order books and Giros.
	Part of the difficulty is that people who are not banked do not know what they lose out by not being banked. One of our responsibilities is to encourage post offices to take advantage of the opportunities that this will provide to meet their concerns.
	I hope that I have answered all the questions that have been raised. If the noble Baroness wishes to intervene and press me on any questions that I have not answered, I am very happy to do so. This is not a party political issue, it is something that we are all concerned about. I have spoken with my honourable friend in the other place, Mr Alan Johnson, the Minister responsible for this provision in the Postal Services Bill. I have provisionally set up an all party peers' meeting during the afternoon of Thursday 7th June, which is in the week when we return after the Whitsun Recess, at which there can be a full and frank discussion before Report stage. He will be in a position to give far better reassurances to Members of your Lordships' House about issues associated with the post office network as we see it in the future. At that meeting--which I shall of course put on the all-party Whips and circularise to Members--Members of your Lordships' House will be able to press the Minister himself in far greater detail than I can possibly answer tonight.
	He will also give information about the PIU report. People will be paid in cash--they will have a very simple method of acquiring that cash if they do not go through ACT, existing banks or machines--through a universal bank. I hope that, as a result of what I have said, your Lordships will agree to withdraw your amendments tonight and seek to press my honourable friend at the meeting on the details. Of course, if, as a result of that, your Lordships are still not satisfied with the replies the Government are seeking to offer, then your Lordships will, I am sure, come back at Report and Third Reading. In the light of that, I hope your Lordships will feel able to withdraw their amendments.

Baroness Byford: I do thank the Minister for the detail in which she has gone into matters. I take the latter point first. She has suggested that we might meet with Alan Johnson, which is very kind of her, but the afternoon she has chosen is actually the afternoon of the Committee stage of the Postal Services Bill in this House. If it is, could we please have another date, because we cannot be in two places at once?
	The Minister said that, obviously over the years money has been lost through the use of Giro and books. For those using ACT, if I remember correctly--and I do not have my Hansard with me--I thought the response her honourable friend Mr Alan Johnson gave was that his understanding was that there were no direct fraud losses from ACT. What did he mean by the use of the word "direct"? Does that suggest that there have never been any frauds using the other payment method or is it just that they cannot be identified?
	Secondly, I am grateful to the noble Baroness for her explanation in relation to the use of the smart card or the Post Office card. If a third person is collecting for someone else, that would need to be very carefully supervised because I suspect that that is sometimes the point at which fraud creeps into the system.
	I turn to the question of costs, which may be slightly outside the noble Baroness's brief. Who will meet the costs in relation to those people who are unbanked? Will it be the Government, the Post Office or the bank? I have not had an answer to that.
	The same relates to the use of the switch card. The Minister said that using the old-fashioned books is an expensive method. But there will be a cost arising from the new cards. Will the Minister give us an indication of those costs? If that is not possible, we shall have to carry forward that matter to the next stage of the Bill. But those are practical issues which the noble Baroness has not yet answered.

Baroness Hollis of Heigham: Perhaps I may try to help the noble Baroness. On the point of "direct" fraud, what I assume that my honourable friend was saying, in terms of ACT, was that the process--that is, the method of payment--had not produced fraud. That does not mean that people may not have inappropriately acquired benefits into their accounts through fraud but that has not been done through the process; that is, the direct payment method has not itself engendered fraud. That is the difference. There may be fraud which is not through the payment method but by manipulation of the benefit system; for example, people claiming benefit while working.
	Secondly, the noble Baroness asked me whether it is possible to run up an overdraft and I did not reply to that question. Unless the proposals change, no cheque book is envisaged. Therefore, it will be impossible, under the universal bank method, to run up an overdraft in that way.
	The noble Baroness asked me how people who are not banked at present will be so in the future. At present, such people are not receiving benefit in the form of the Post Office acting as an agency for other banks. In future, they will receive their benefits through the universal bank and they will have a card. The only difference for those people is that they will have a Post Office card rather than a book. In that sense, they will be in the same position as they are now but there will be a more secure and convenient method of payment.

Baroness Byford: I accept what the Minister says but the provision of that card will cost money. We are getting rid of a book, which costs money, but it is to be replaced by a card, which also costs money.

Baroness Hollis of Heigham: Clearly, the DSS has paid and will continue to pay for the costs of the payment of benefit. Some of those negotiations will be part of what the DSS and POCL will be discussing over the next year or so. But we are determined that nobody who receives payment through the universal bank method will receive a reduced benefit in the form of a bank charge by virtue of that method of payment. That seems to me to be the important issue.
	Homeless people too will have better protection than they have at present. The identification of people who have information in evidence to set up their entitlement to benefit, including homeless people who are eligible for income support or whatever, will serve them to acquire a bank card, a Post Office card, on which to draw their benefit. The advantage for them is that they can use their card at a range of post offices and will not just be tied to one. I hope that I have now answered the noble Baroness's questions.

Baroness Byford: I am grateful to the noble Baroness for her extremely good attempt at doing so this evening. I shall read Hansard with interest but I thank her for her answers.

Lord Higgins: The first point that one needs to make is that the report of the Trade and Industry Committee, published last September, seems to be rather at variance with what the Minister said this evening. In its report it said that the image presented of a flood of new entrants opting for ACT is exaggerated. Most pensioners are not, in fact, opting for ACT.

Baroness Hollis of Heigham: I was very clear in saying that it was the new pensioners. Something like 50 per cent of new pensioners and something like 54 per cent of new people coming into child benefit use ACT. I tried to suggest there was a generational cohort effect. I also pointed out that 93 per cent of all pensioners have either a current or a savings bank account.

Lord Higgins: If the noble Baroness had allowed me to finish, it would have been apparent that what she has just said is also inconsistent with what the report said, which was that fewer than one in 10 income support recipients elect for ACT and that fewer than one in three of new benefit recipients opt for ACT. The fact remains that for a variety of reasons most new benefit recipients still opt for cash in hand from a post office and that choice must be respected. Clearly, there is some dispute about the figures.

Baroness Hollis of Heigham: I am talking about child benefit and pensions as being the two universal benefits. Indeed, it is likely that many people, particularly young people receiving JSA or, in some cases, loan parents on IS, do not use that method and disproportionately use the post office payment method.
	One, not exactly shocking, but slightly surprising fact that may be more familiar to the noble Lord, Lord Mackay, is the number of people who have a bank account when they are employed but when they become unemployed choose not to use it. One can speculate on the reasons for that. Instead they prefer to be paid cash in hand through order books. One may wonder about that.
	Certainly, the statistics that I gave the noble Lord were about retirement benefit, new entrants to retirement pension and new entrants to child benefit. Taking the current state across all the population, that is partly a generational thing.

Lord Higgins: We shall need to go into the statistics further, other than across the Floor of the Committee. My impression still is that the situation portrayed by the Minister is exaggerated. Be that as it may, I believe that the Committee would be grateful if the Minister could clarify the distinction between the system that the Government abandoned and the system they now propose. As I understand it, the only difference is the distinction between a smartcard, on which all the data are embedded, and a Switch card which does not have the data on the card but allows the data to be read once it has been through the slot. I believe that is the only difference between the two systems.
	The noble Baroness has enlightened the Committee a little on how the cash is to be paid. We shall need to read carefully what she said. No doubt, we can clarify that in the way that she has described--in a meeting. However, like the noble Baroness, Lady Byford, the date suggested is not convenient for me, but no doubt something can be sorted out. It would certainly be helpful to have that clarified over the table, so to speak.
	One crucial point, as far as the post offices are concerned, is that estimates suggest that there will be a loss of something like 40 per cent of existing post offices. The Minister has said that they will consider a subsidy as needed. I am not clear about the purpose of that subsidy.

Baroness Hollis of Heigham: I do not know from where the noble Lord produced the figure of 40 per cent of post offices. He may be confusing that with 30 to 40 per cent of the revenue of some post offices being derived from the payment of social security benefits. I was about to intervene because I was unsure whether the noble Lord meant what he said.

Lord Higgins: It was a slip of the tongue. What does the Minister suppose will be the reduction in post offices if there is no subsidy? What does she envisage is the purpose of the subsidy?

Baroness Hollis of Heigham: I cannot go into that. In the recent Bill in the other place a power has been taken by the Government to pay subsidy if they believe it appropriate; in other words, they may pay subsidy. That would be a matter of negotiation with POCL, and so on. The intent behind it is simple: I believe that we all share an appreciation of the importance of the post office, particularly in rural areas and in deprived inner urban areas, as the centre for offering cash and other facilities to local people. The Government, no more than the previous administration, do not wish to see that network shrink. That does not mean to say--as I tried to say earlier--that individual post offices may go on to close and not be re-opened when someone running it retires because it has not been possible to cross-subsidise it.
	One other power may be of interest to the noble Lord. I understand that in the Postal Services Bill extra powers are given to POUNC--which I believe will be renamed as the post office users council--to take on board, to query and to interrogate the need for any local post office closure. So we actually strengthen the ability to ensure that the post office network, as far as is possible, remains to serve the communities which are so heavily dependent upon it.

Earl Russell: Usually having the first amendment after dinner is by way of being a penance; but tonight, for the benefit of those who perhaps had to hurry their dinner, we provided the Committee with a sandwich. The noble Lord, Lord Higgins, and I, supplied the bread; the noble Baroness, Lady Byford, supplied the meat--and very good meat it was too and I shall read it with a great deal of care; the noble Lord, Lord Hylton, supplied the butter; the noble Baronesses, Lady Gale and Lady Pitkeathley, supplied the mustard; and the right reverend Prelate supplied the salt.

The Lord Bishop of Hereford: Highly seasoned!

Earl Russell: I can assure him that it has in no wise lost its savour; and the Minister provided the fire at which we have been very gently toasted.
	Let us react for a little while to the toasting. I understand and hear what the Minister says; that is, that people will remain able to collect their cash at post offices. But that assurance can be valid only in so far as they can find any post offices. That is the central weakness in the Minister's position. It is a further weakness in her position that, while she is responsible for the delivery of benefit, she is not responsible for the survival of the post office network. Here we have something where the acid of the change programme has perhaps corroded the joining up of government, such joining up as previously existed.
	I am not certain that the Minister recognises it as a responsibility in these proposals to ensure the survival of the post office network. She talked of post office customers voting with their feet. I do not believe she realises quite how persuasive a canvasser the Treasury can be when it gives its mind to it. Every year the Treasury renegotiates with the Post Office a contract for the delivery of benefit. Every year there is a downward pressure on that contract--of course there always is with anything that the Treasury negotiates.
	That has had the effect--certainly in post offices in my part of London and I believe in many others--of increasing the waiting time at post offices, to the point where the pressure to consider another system has become rather intense. So the voting with the feet may have happened to feet which have been quite heavily guided. Once again I remind Ministers that they should not assume that "efficiency" is actually efficient.
	The Minister asked post offices to stop treating this Bill as a threat. It is of course difficult because, as the noble Baroness, Lady Byford, pointed out, they are small businesses and must plan their future. If small businesses are to stop treating this as a threat, they need something in this Bill which will enable them to be sure that they have a secure future for which they can plan; otherwise the uncertainty will drive them out of business. It is a bit like an argument as to whether to repair the library, or whether there is no need to repair it because we are going to build a new library shortly. That may be true. But it is no good if, in the mean time, the rain comes in and destroys all the books. So if the post office network crumbles before the Government have come up with an adequate replacement, there is not going to be any easy recovery. That is why some reassurance is necessary now, at this moment, before any more closures take place. These closures have reached the point where they are creating a situation of real danger.
	I do not know whether the Minister has seen a report in the Independent today, based on a press release from my honourable friend Mr Webb. He has discovered that the Minister's colleague Mr Rooker has sent out a letter to sub-postmasters, objecting strongly to them trying to persuade people to get their benefits through the post office rather than transferring to ACT. I cannot feel that my honourable friend was in any way wrong to use the word "threat" in relation to that letter. This sort of thing does rather encourage post offices to feel that they are under threat. If the Minister wants to persuade them that they are not, she will have some quite hard work to do.
	I must thank her very warmly indeed for the offer of the meeting with Mr Johnson. That is a truly welcome offer, subject to the point made by the noble Baroness, Lady Byford, about the date. The absence of all those involved in the Post Office Services Bill would clearly very much weaken anything we were able to do; but I am sure that it will prove possible even in the busy timetable of Ministers to find another.
	It is possible that we shall be reassured about the Government's long-term intention. Government long-term intentions, however, do change in the light of events, usually economic circumstances. There is still a case to be considered about the need for a long-stop to be put into this Bill. Even if I were absolutely perfectly reassured, therefore, while I would be putting a case in very different terms, I might not necessarily cease from putting a case.
	The Minister made a great argument about the cost of £1.36 per taxpayer. That is not only a cost of delivering benefit; it is also a cost of delivering a post office facility, which is the real heart of communication in many communities. I wonder whether, when one takes that into account, it might be cheap at the price? This is where it is important that preserving the Post Office is not her departmental responsibility. One wonders whether it carries the weight in the equation which perhaps it should.
	I am also very struck by the contrast between the Minister's answer this time and her answer to the previous amendment. In the latter answer she was putting forward--I do not believe that she will think this an unfair description--a very strong communitarian morality, in which some people see an authoritarian tinge. On this amendment she was putting forward a case about post offices which involves the risk of dissolving the cement which holds together a spontaneous, natural community.
	Those two arguments make rather uncomfortable bedfellows. Yet the mere fact that they are uncomfortable bedfellows creates a certain rather uncomfortable logic in putting them together. If you destroy the spontaneous sense of community, you may well be under temptation to create it artificially by Government authority. It really does not work. If it is not there spontaneously, Government cannot make it.
	However, that is not a problem which I would for one moment suggest addressing in the Division Lobbies at this time of night. For the time being, therefore, and subject to discussions with the noble Lord, Lord Higgins, about the text of a future amendment, I beg leave to withdraw this one.

Amendment, by leave, withdrawn.
	[Amendment No. 181 not moved.]

Lord Goodhart: moved Amendment No. 182:
	After Clause 65, insert the following new clause--
	:TITLE3:TEMPORARY ENTITLEMENT TO INVALID CARE ALLOWANCE ON DEATH OF PERSON CARED FOR
	(" . At the end of section 70 of the Social Security Contributions and Benefits Act 1992 (invalid care allowance), there shall be inserted--
	"(11) The Secretary of State shall make regulations in respect of persons who cease to be in receipt of invalid care allowance as a result of the death of the person in respect of whose care the allowance has been claimed.
	(12) Regulations under subsection (11) shall set the condition for the award to be satisfied for a period of eight weeks from the date on which that person ceased to be in receipt of invalid care allowance.".").

Lord Goodhart: This amendment deals with the situation of somebody who is in receipt of invalid care allowance, where the person who is receiving the care dies and the invalid care allowance therefore stops.
	The level of care required in order to qualify for invalid care allowance is very substantial and there are therefore likely to be very considerable physical demands on the carer. What is more, the person who is being cared for is likely to be closely related to the person providing the care. The person being cared for may be a parent, a child, a spouse or a partner of the person providing the care. Therefore, in addition to the physical demands of caring, there is likely to be a considerable emotional drain on the person providing the care, who, almost inevitably, will be distressed by the fact that he or she is having to provide the care.
	As a result of this situation, the blow to the carer when the person being cared for dies is likely to be very severe. Indeed, this will be a great emotional loss in most cases. The person providing the care is likely to feel that he or she has, in a sense, lost all purpose in life when the person being cared for--who has, in effect, been the centre of his or her life--dies. In those circumstances, surely what the carer needs is a break--a holiday if one can be found--or, at the very least, the chance to do a little thinking about the future, which will be very different from the past.
	Carers do not want--nor should they be asked--to rush immediately from the deathbed into the process of looking for a job or claiming means-tested benefits. Therefore, surely carers ought to be entitled to a kind of respite break; that is to say, a few weeks' rest. We propose eight weeks in the amendment, which in the circumstances is hardly substantial. We believe that these carers should be entitled to a few weeks' break in which to pull themselves together, think about the future and recover from the immediate aftermath of their loss, without having to go to the jobcentre or to the benefit office to claim benefit. During that time, they will be able to bring themselves to think about what the future holds for them. Surely the eight weeks that we suggest is a minimum that ought to be provided for former carers. We believe that this is a necessary requirement if we are to regard ourselves as a properly compassionate community towards those who will find themselves in a very difficult and painful situation. I beg to move.

Lord Astor of Hever: We on these Benches have considerable sympathy with the proposed new clause, as outlined so clearly by the noble Lord, Lord Goodhart. We do not believe that the cost of this proposal would be very high. We probably all have experience of the problems attached to the winding-up of the estates of parents or relations. Genuine problems are encountered by bereaved carers and this proposal would provide a breathing space for them at a distressing time.
	The Minister in the other place was sympathetic to the amendment and said that the Government would look at the matter in the round. I therefore look forward with some hope to hearing the Minister's reply.

Baroness Pitkeathley: I, too, should like to speak in support of the amendment. I never forget the carer who once said to me, "We're expected to go from the graveside to the jobcentre". I believe that the death of someone for whom you have been caring, especially if the situation has gone on for some years, is most distressing. I am sure that my noble friend the Minister will do her best to look sympathetically at this proposal.
	We are all aiming to enable carers to get back into the workforce so as to help them both financially and emotionally. Sometimes they will need such a period of time in order to get themselves geared up for seeking new employment. I remind the Committee that there is a precedent for the eight-week breathing space, as it were, in that the carer premium on income support extends for eight weeks beyond the death of the cared for person. That too may encourage the Minister to look sympathetically on the amendment.

Baroness Hollis of Heigham: Amendment No. 182 would extend the period of entitlement for all recipients of invalid care allowance to eight weeks after the death of the person being cared for and in respect of whose care ICA was being paid. As the Committee is aware, I have a great deal of sympathy with the intention behind this amendment. I hope that I may respond to it in terms of the Government's agenda of the National Strategy for Carers--Caring for Carers--which was published last year. In that report the Prime Minister said that,
	"Carers are among the unsung heroes of British life"
	and that they,
	"should be properly recognised and properly supported".
	I believe that the entire Committee would share that view.
	The national strategy made clear the Government's intention to do this and, among the many positive initiatives that they introduced, stated that they would,
	"keep under review how financial support can best meet [carers'] needs".
	Clearly, therefore, the Government are committed to taking forward a review of the financial support available to carers. In doing this, however, we must take account of the work currently being done to prepare our White Paper response to the Royal Commission on Long Term Care, which we hope to publish later this year. I can, therefore, confirm that the financial assistance given to carers is currently under careful consideration, and, as and when we have specific proposals to make, we shall, of course, consult the carers' representative groups.
	I turn to the amendment itself. I was not quite sure where the noble Lord, Lord Goodhart, stood as regards the differences within groups of carers, as the group of carers which the amendment seeks to help is small, though none the less deserving of consideration because of that. Bereavement is a universally difficult time, and family finances have to reassessed. However, the benefit system already provides the kind of protection he seeks for many carers whose need is greatest, in particular for those on low incomes and those who have lost a spouse--those who move from being a carer to going to the jobcentre.
	About half of all carers who receive invalid care allowance also receive income support and the carer premium, which is the increase paid specifically for people entitled to ICA. Those who would not receive it would tend to be the wife who is married to a working husband caring for either her mother or his mother. As a result of being married to someone who is in work, she would not be eligible for income support. However, if she were the only daughter, or the daughter looking after her mother as a full-time unwaged job and she therefore received ICA topped up with income support, under the current rules she would receive the eight-week rollover. The eight-week rollover is already given to those in financial need. However, it is not given to those whose emotional stress may be no less difficult but who do not have the same level of financial need because they are not dependent on the benefit system.
	As I say, about half of those carers who receive the carer premium, IS and ICA will continue to receive the rollover for eight weeks after the responsibility ends. In addition, during this eight-week period they are also exempt from the need to be available for and actively seeking employment in order to qualify for IS. This gives them time to adjust. Therefore the amendment would not help them.
	In addition, a quarter of all carers who receive ICA are looking after a spouse. Again the woman in that situation would not normally receive income support on top of her ICA because the man would receive the benefits, for example, IB or whatever. Any top-ups would be paid to the man. When a spouse dies, bereavement benefits are usually paid promptly--within a few days of the claim being made. As such payments are made in preference to ICA--in the sense that one is not paid twice for the same contingency--an ICA run-on would be of little or no material assistance for those carers either, because normally such a person would then qualify for widow's benefit, which would displace the ICA.
	For those who are most vulnerable and in greatest need, therefore, their income is already protected, despite the loss of ICA on the death of the disabled person for whom they have been caring. The amendment would, in practical terms, help only those carers whose income is over income support level. There are, of course, priorities in terms of expenditure here. Nevertheless, whether or not this is a well targeted proposal, I hope that I have made clear that, in broader terms, the Government are aware of the need for adequate financial support for carers. They are also aware of their existing commitment to keep this under review in the context of longer-term care issues and the need to address the concerns of carers in the round.
	I do not feel that I can ask the Members of the Committee to take it from me today that we shall be specifically revisiting this matter, but, in the light of the fact that we are producing a White Paper in response to the Royal Commission, in which a range of issues will be covered--I am not party to that review but I suspect that issues such as financial support for carers and respite care and so on will be explored--I hope that the noble Lord will feel able to withdraw his amendment.

Lord Goodhart: I am grateful for the support that the amendment received from the noble Lord, Lord Astor, and the noble Baroness, Lady Pitkeathley. Although I accept, as the Minister pointed out, that not everyone who is a carer will necessarily lose income as a result of the ending of the invalid care allowance, this is a substantial problem--not least for those who are not formally married but who have partners, either of the opposite sex or of the same sex.
	I am grateful that this is one of the issues which will be considered during the course of the consultation on the White Paper. We shall have to consider whether to bring this amendment back again in the light of what has been said today, but, for the time being, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Earl Russell: moved Amendment No. 183:
	After Clause 65, insert the following new clause--
	:TITLE3:INCAPACITY BENEFIT: CARERS
	(" .--(1) In paragraph 2 of Schedule 3 to the Social Security Contributions and Benefits Act 1992 (contribution conditions for short-term incapacity benefit), at the beginning there shall be inserted "Subject to paragraph 2A below".
	(2) After that paragraph there shall be inserted--
	"2A. A person shall be taken to satisfy the contribution conditions for short-term incapacity benefit mentioned in paragraph 2 above if, throughout the last two complete tax years before the relevant benefit year, he has been precluded from employment by responsibilities at home.".").

Earl Russell: In moving the amendment, I should begin by offering an apology to the noble Baroness, Lady Pitkeathley. She may remember that in a particularly moving speech during the Welfare Reform Bill, when we were discussing the tightened contribution conditions for incapacity benefit in Committee, she pleaded for an exemption from these contribution conditions for those who had given what were perhaps the last years of their life in which they would have been capable of regular work to the task of caring for someone unable to care for themselves. I think that the Minister heard that speech with a certain degree of cautious sympathy. I hope that she will not dispute that description. I thought at that point that an amendment was probably in progress which might have been accepted at a later stage of the Bill--but, of course, we ultimately knocked that clause out. You cannot amend words that are not there, and when the Bill came back from another place it contained no concession to the noble Baroness, Lady Pitkeathley. I hope that she will understand what moved us to go ahead and knock out the clause. It is a regret, which I felt at the time, that it was not possible in those circumstances to give a hearing to the very powerful case she had made.
	We do not want to discourage those involved from caring for sick or elderly relatives. There is an argument of common humanity here--and that argument is not to be dismissed. There is also a very strong argument from the point of view of the Treasury. I do not know what is the latest update of the figure of the amount of money which carers save the Treasury. When I first came into this House it was £24 billion; since then I have seen it quoted as £30 billion. It may have gone up again. I thank the noble Baroness for confirming that that is the latest figure.

Baroness Hollis of Heigham: I am grateful to the noble Earl for giving way. He is making a speech which centres essentially around carers as we more conventionally understand them in terms of recipients of ICA. But, of course, his amendment, which concerns HRP, obviously involves essentially the carers of children--that is, parents. Do I understand that the noble Earl is concerned only with ICA recipients as opposed to other kinds of carers? I should tell him that my response is predicated on the second of those.

Earl Russell: I thank the Minister for that contribution. The arguments have some point in common. It is not only the old who need to be cared for; the need to care for those who need it is one which must fall somewhere.
	Those who are undertaking it cannot, at one and the same time, be in the labour market. So if they are out of the labour market because they are doing something else which is necessarily in the public interest, which someone else would probably have to be paid to do, possibly out of public funds if they did not do it, a case for the exemption from the contribution conditions is quite a strong one. I beg to move.

Baroness Pitkeathley: Far be it from me to disagree with the noble Earl, particularly in view of his most gracious apology about a previous Bill, but a great many carers do combine paid work with caring. It is one of the main features of the National Carers Strategy to enable those carers better to do so.

Earl Russell: I appreciate that "superwoman" exists, but not every woman can rise to it.

Baroness Hollis of Heigham: Perhaps I may add to my noble friend's contribution. Seventy-five per cent of all married women work and more than 60 per cent of married women with children work.
	As we have heard, this amendment relates to the contribution conditions for incapacity benefit. There are two contribution conditions for entitlement to IB. Currently the first condition requires a person to have actually paid a certain amount of contributions in any one tax year. But from April 2001, provisions in the Welfare Reform and Pensions Act will require contributions to have actually been paid in one of the past three income tax years rather than in any tax year. We believe that that is reasonable. The purpose of IB is to provide a replacement income for people who previously had earnings from work and have become incapable of work due to illness.
	The way this contribution condition works at present means that a person who has had no contact with the labour market for many years would still qualify for IB as long as they had paid the minimum amount of contributions in just one year. We do not think it right for that to continue, which is why the Government pursued the matter last summer.
	The second contribution condition for IB requires contributions or credits equivalent to 50 times the lower earnings limit in both the past two tax years. That condition is unchanged. People will continue to be able to satisfy the condition by credits alone.
	The amendment before us would represent a significant departure from the current arrangements. It would allow tax years during which people are unable to work because of caring responsibilities at home to count towards satisfying the contribution conditions for IB. As drafted, the amendment refers to the first contribution condition. People unable to work because of caring responsibilities at home would be deemed to have satisfied the first contribution condition regardless of whether they have ever paid any contributions at all. We believe that it is reasonable to expect people who have been in a position to work to have made at least a modest contribution in order to get a contributory benefit.
	We do recognise that some people who have not had an opportunity to pay contributions should be able to qualify for IB. We are protecting the position of carers who have not paid contributions in the past three years. Carers include those caring for children with severe disabilities--children who attract either the higher or the middle rate DLA component. They can use credits to qualify for IB provided they have paid contributions at some point. From April 2001 we are making special provision to allow entitlement to IB for disabled young people who have never had an opportunity to pay contributions; in other words, those who in the past would have gone on to severe disablement allowance. But people who have responsibilities at home have not necessarily been prevented, other than by their own choice, from working to a greater extent and paying contributions. After all, we are talking about a contributory benefit. Such people would not qualify at present and extending IB to them, regardless of their circumstances, would therefore represent a significant breach of the contributory principle.
	The Government fully support the wishes of those, for example, who want to remain at home and care for their children when they are very young. But it does not follow that if people choose to stay at home to look after their children rather than combine looking after their children with a part-time job they should have access to a contributory benefit which is intended as an earnings replacement for people who have been in work and would still be in work were it not for their illness.
	After all, many people do combine childcare responsibilities with work and do earn enough to qualify for IB. The minimum amount of contributions required equates to earnings of just £1,650 in a period of 25 weeks or less. The benefit is not therefore confined to those who are in well-paid jobs. The minimum wage will bring many more part-time workers, in particular women, above the earnings threshold for benefits--the lower earnings limit--which is around 18 hours a week at the minimum wage. I think that the essential point raised by the amendment is how far should the benefits system provide earnings replacement benefit for those who have not been in recent employment, who have not paid contributions and who have made other choices.
	I hope that, on the basis of what I have said, the Committee will agree that our contribution conditions for IB strike the right balance and that the noble Earl will withdraw his amendment.

Earl Russell: I suppose that I should have guessed that nothing on earth is more difficult than to argue against the Department of Social Security's filing system. One can argue against natural justice, common sense and useful effects, but one cannot argue against a ministry's system of classification. It seems to be written in tablets of stone, although I am inclined to think that that would be understating the case.
	When the Minister invokes a point of principle, she should perhaps think twice about the actual effects of such a point of principle. If the effects of a principle are not good, one should go back and wonder whether that principle is correctly defined. However, I do not think that we shall be able to get very far with that tonight. In the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 66 agreed to.
	Schedule 6 agreed to.
	Clause 67 agreed to.
	[Amendment No. 184 not moved.]
	Schedule 7 agreed to.
	Clauses 68 to 70 agreed to.

Earl Russell: moved Amendment No. 185:
	After Clause 70, insert the following new clause--
	:TITLE3:BENEFITS PAYABLE TO CERTAIN SINGLE CLAIMANTS UNDER THE AGE OF 25
	(" . Regulations 3, 4 and 5 of the Housing Benefit (General) Amendment Regulations 1996 (the "amending regulations") are hereby revoked, and in consequence thereof Regulations 10, 11 and 12A of the Housing Benefit (General) Regulations 1987 shall have effect as if the amendments contained in the amending regulations had not been made.").

Earl Russell: I move this amendment with the support of the LGA, the ALG, the Child Poverty Action Group, Mencap, Centrepoint, NCH Action for Children, Barnardo's, Crisis, CHAS, the Churches National Housing Coalition, the National Homeless Alliance, the National Rent Deposit Forum, the Chartered Institute of Housing, and the Children's Society. That is not a negligible list. It represents the collective wisdom of most of those who work in the field.
	The effect of this amendment would be to abolish the single room rent restriction for housing benefit for those under the age of 25. That provision restricts young people to housing benefit at a level which is supposed to be appropriate for the rent of a single room in a given area. However, I include the word "supposed" advisedly, because the level of support is very rarely sufficient.
	The provision was introduced in 1996. The Minister and I both said that it would be a disaster. When one makes such a statement, one always watches to see whether it was in fact true. In this case I think that we were optimistic. The effect has been even worse than both of us then supposed. The policy rested on a fundamental misapprehension of the nature of the housing market.
	I think that I am correct in saying that the intention behind the policy was, first, to encourage people to shop around and to trade down to property perhaps more appropriate to their income. It was felt that housing benefit was sustaining an artificially high level of rents. Secondly, it was hoped that, in some cases, it would induce landlords to reduce the level of their rents. Thirdly, it was hoped that it might lower the level of market rents overall. It has done none of those things.
	A large body of research has been done on this subject, a certain amount of which I have in front of me. However, I need rely only on the research done jointly by the DETR and the DSS. That seems very clear in its findings. Tenants who considered this possibility found that it was not an option, because there was simply nothing cheaper to be found in their immediate area. I know that the Minister will not dispute this so I do not think I need bother with finding the page.
	The research concluded, perfectly correctly in my opinion, in line with all other research on the subject that the system would not work unless there were rents available in the area that were within the limit of the single room rent. In most of the areas studied--now a considerable number--that is simply not the case. Whether that is inherent in the principle of the thing, or whether it is simply that those who are working with the Treasury necessarily fix the rents which they allow too low, I should not care to say. But since, if it is the second, I do not expect it to change, I doubt whether the point is material.
	In only 13 per cent of cases cited in the DETR research were people able to negotiate any reduction of rent with their landlord. Of the remainder, 96 per cent were left to pay a shortfall in rent themselves. The shortfalls were substantial: in a few cases they could even be up to £50 a week. Twenty per cent of those people met costs out of borrowing; 81 per cent met them out of benefits. The Minister will have noticed that there is a small overlap in the figures. I do not think it ought to cause any surprise; it is not particularly mysterious. Twenty per cent of those involved in the survey were found to owe debts of over £500. On income support or JSA, debts of over £500 are pretty considerable. We need to know a good deal more about the level of debt on benefit than we do at present.
	The provision has been no more popular with landlords than it has been with tenants. The extent of agreement on the single room rent between the landlord interest and the tenant interest is one of the most striking things about it. On the whole, landlords do not reduce rents. In the northern city surveyed in the DETR research, 33 per cent had stopped letting to single people under 25. In the inner London borough surveyed, 25 per cent had stopped doing so. Those are pretty considerable figures in a market where supply was already not on the plentiful side.
	A great many more have moved out of the housing benefit market altogether, and a certain number have even moved out of the private rented market altogether and have sold the property. That was particularly clear in the Centrepoint survey of the single room rent in Devon. But since I failed to lay my hands on that around midnight last night, I shall not quote figures from it. The Minister and I have been over this course before. She knows about it as well as I do. So we are seeing a diminution in supply in a market where supply was already particularly thin.
	When this matter was debated in another place, we were encouraged to hope for something from the Green Paper. The words of the Green Paper are not strong enough to be described as weasel words--"mice" might be more appropriate. With the leave of the Committee, I should like to read a fair part of what the Green Paper has to say on the subject. It is not very much. It states:
	"A stable home provides a secure foundation from which to find work, and Housing Benefit should help provide this environment. A number of commentators believe that the Single Room Rent restriction ... is making it difficult for young single people to access and maintain accommodation. For example, critics say that landlords are refusing to rent to under 25s".
	One wonders whether "a number of commentators" should read "all commentators". If there is a commentator who says anything else I should be very interested to hear from him or her. The nearest one gets to a suggestion is in the next paragraph. Whether these words even amount to a suggestion is perhaps grammatically open-minded:
	"One option to consider is to broaden the definition of the Single Room Rent so that a range of rents for shared accommodation is used (e.g. shared houses, flats and bedsits) instead of the current restrictive one room non-self contained accommodation definition".
	I suppose that that might be a little better than nothing. It is true that it would deal with one of the big points made at the time, which was that there was simply not enough accommodation for single people under 25. But the whole proposal was based on an entire misapprehension of the nature of the housing market, which is why it did not work. It was believed that it was a demand-led market in which housing benefit pushed up the level of rents. First, that grossly underestimated the shortage of private rented accommodation, especially at the cheap end of the market. The private rented sector has been in decline since 1919. We cannot afford to let it go much further. There are some needs, especially those involving considerable mobility, which cannot satisfactorily be met in any way.
	Secondly, I believe that landlords' costs were grossly underestimated. Private landlords, as distinct from registered social landlords, are not charities; they are not in business for purely philanthropic motives. Therefore, if we require them to take a rent on which they do not make a profit there is no good reason why they should stay in business, and a great many of them do not.
	Thirdly, I believe that the policy grossly underestimated the amount of profit that landlords could make out of selling their property and investing the capital in equities. In the present state of the housing market that point is even truer than it was before. After all, if a landlord can double his income simply by selling his property, doing no work and investing the money, why should he go on with the troublesome business of repairing and maintaining it and dealing with disputes between tenants when he can make a great deal more money by doing nothing at all? One cannot expect private business to be simply a philanthropy. Therefore, the policy failed because it was fundamentally misconceived.
	By now it is clear that we cannot expect people to go on meeting large amounts of rent out of their income support or JSA. That will be even truer if the kind of conditionality of which the Minister spoke earlier becomes a normal part of the payment of benefits. It means that people who are caught by that conditionality will be instantly evicted. That will mean either a very large disorderly crowd on the streets or a considerable addition to public expenditure. I simply do not see how people can be kept in good health while they pay their rent with large chunks of income support. If housing benefit does not meet the full rent we are in very great trouble. The Minister said in relation to the 1997 Bill--I welcomed her comment--that she still accepted the principle of the 1986 Act that income support should not be used to meet rent. I hope that the noble Baroness can tell the Committee that in the course of the Government's review of housing benefit that principle will continue to hold. If not, we shall all be in very deep trouble. That includes private sector landlords as well as the rest of us. There is not much of the private sector left. We cannot afford to play fast and loose with what there is. If we lose it, replacements will cost us all a great deal more. I beg to move.

Baroness Hollis of Heigham: I shall respond to the voices around the Chamber tonight! Amendment No. 185 seeks to remove the rent restriction rule--the single room rent--which applies to most young people under 25 years of age living in the deregulated private rented sector.
	Perhaps I may respond to the noble Earl's point about income support. We believe that income support is what people should live on. Housing benefit should be available to meet housing bills of a reasonable level as defined by the rent officer. The noble Earl asked whether there was any expectation that income support should be asked to pay housing bills. I take it that he was not saying that he would not consider any possible suggestion that one might embed into income support an additional allowance to cover part of the housing bill with some element of discretion. That is one of the proposals being floated in discussions. The noble Earl's point was that if any such housing benefit were to be embedded into income support, it must be additional to, and not eating into, current levels of income support. It is a view which he and I have expressed over the years.
	The single room rent restriction was not of our making. I do not want to give the impression that it was a success or without fault. The available research, some of which was quoted by the noble Earl, is clear on that. We undertook to keep the single room rent restriction under review when we came to office. We acted swiftly to remove its extension--I think that it would have been dire and monstrous--to single people under the age of 60. It would have produced a situation where a widow, for example, was required to go into a house without even self-contained accommodation.
	The noble Earl made reference to the bulk of research evidence which suggests among other things that young people are placed at a disadvantage when seeking to rent accommodation because landlords feel that they will be unable to pay the rent if they are dependent on housing benefit. Let me reassure the noble Earl that we have considered carefully all the research evidence so far available. We understand the concerns but we need to look at the range of options so that people claiming HB are not in a better position than those who have to pay the rent from their own resources.
	The noble Earl's amendment would run contrary to this. For example, under the noble Earl's amendment, a single young person who is unemployed would be able to claim housing benefit for a one-bedroomed flat whereas someone on modest wages would be unlikely to afford such accommodation and would almost certainly be sharing accommodation in that situation. I do not think that it is unreasonable to expect young people to share accommodation provided that they are not particularly vulnerable or have special needs--for example, those who are care leavers, the severely disabled or the like. I do not think that it is unreasonable that young people should share accommodation.
	My difficulty is that local authorities have discretion with government funding--it is a matter I have raised previously with the noble Earl--to provide additional financial help with rent to those who are in most need. For example, they could exercise their discretion if they chose to help those they believe should live in independent accommodation. To my distress, many authorities are simply not spending anywhere near the money allocated to them by central government. We want to encourage them to do so, and have recently issued revised guidance to explain the nature and intent of the discretionary scheme.
	We have the exceptional hardship scheme but at present, although government are allocating nearly £20 million a year, only £8 million or so of that money is being taken up by local authorities. While Hillingdon is spending virtually every pound allocated to it by government to meet the problems, some of which have been outlined by noble Lords, Hackney is spending only a tenth of its allocation. While Stoke-on-Trent is spending well above its allocation, Blackburn is spending only a sixth of it. Leicester and Stratford-on-Avon are spending all of their allocation aimed to help to meet the problems of hardship under housing benefit restrictions whereas my own authority, Norwich, is spending only a fifth of it; and Oxford is spending not a penny. I know that that is a high rental area because my family lives there and I have to help with the rent. Yet local authorities are not taking advantage of a government scheme designed to help people in such need.

Lord Goodhart: I am grateful to the Minister for giving way. Perhaps she will find that the change of control that recently took place in the Oxford City Council may lead to a different outcome.

Baroness Hollis of Heigham: Even more that the dissemination of useful information in your Lordships' House will have all authorities, irrespective of party colour, taking advantage of additional resources placed by government to allow them to meet the need.
	I have studied the figures and there is no rhyme or reason why of two authorities in adjacent areas one will spend not a penny of the allocation while the other will spend every penny. It is entirely discretionary, but it seemed to us the proper way to respond to the problem in the interim period before we finally determined in the light of the consultation exercise how we take the Green Paper forward.
	We inherited a problem. We responded by making our discretionary hardship scheme more generous. Local authorities have not availed themselves of that money, even though it was meant to be bridging finance until the Government's proposals have been formulated in the light of response to the housing Green Paper. The money is available to local authorities, but they are not using it. I hope that with your Lordships' help they will.
	Instead of going down the route proposed by the noble Earl, Lord Russell, we have suggested in the housing Green Paper that one option to overcome the barrier to young people obtaining accommodation is to broaden the definition of the single room rent so that it includes a range of rents for shared accommodation--shared houses, flats and bedsits--instead of the current definition which limits it to the average rent for one room which is not self- contained. We need to understand how that will work in practice, which is why we are seeking views. We also need to understand how landlords will react to the situation and whether the option will provide young people with accommodation at an affordable price, giving them the security and decency of accommodation they need in order to take up employment.
	The Green Paper has raised a range of issues. We are considering the responses and reach our decision in the light of those. In the meantime, we have made available the bridging finance in order to overcome some of the hardships caused. I hope that the noble Earl will understand that I cannot give firm commitments beyond that, except to say that we are looking carefully at the responses to the housing Green Paper and we take the research very seriously, as he would expect. I hope that in the light of my comments the noble Earl will feel able to withdraw his amendments.

The Lord Bishop of Hereford: Perhaps I may ask the Minister to clarify the discretionary money. I understand that care leavers are exempt from a single rent restriction up to the age of 22. They are deemed to be vulnerable and may well need self-contained accommodation. However, between the ages of 22 and 25 no such protection is provided, except presumably the discretionary money at the disposal of local authorities. What happens to those local authorities which are spending all the discretionary money but in which vulnerable care leavers may be in that position and for whom no money is available? Is it possible that some specific exclusion may be made for vulnerable care leavers between the ages of 22 and 25?

Baroness Hollis of Heigham: That is a point well taken. I have all the figures from local authorities and see that those which are spending every penny from the exceptional hardship scheme are few. The total expenditure is about 40 per cent across the country. Therefore, almost all local authorities have head space to meet the need which exemplifies the groups for whom the money was intended.
	Last year we sent out a circular on housing and council tax benefit, A35/99, because we were worried about local authorities failing to take up the resource. It clarified the conditions that must be satisfied: for example, housing benefit must be calculated under the local reference rent or single room rent rules; there must be a shortfall between that and the maximum rent; there must be some housing benefit payable to him; and he would suffer exceptional hardship. However, it goes on to state that "exceptional" should be taken to mean "out of the ordinary". Paragraph 10 states:
	"That is not the same as 'very unusual' and criteria cannot be set that can only rarely be met. Nor should a claimant be ruled out because someone in similar circumstances would suffer similar hardship. That could mean that both of them would be in exceptional hardship".
	Paragraph 12 states that local authorities must consider each case individually and should not devise groups of claimants who, by their very nature, experience hardship. A young person, for example, with special dietary needs may be unable to cut back on essential expenditure in quite the same way and should not be refused such a scheme. In other words, first, there is head space for most local authorities to meet the needs. Secondly, the Government were at great pains to say that "exceptional" should be unusual; that is, not so rare that it never happens, but simply "not normal".
	Therefore, one would never say that all students, by virtue of being students, would suffer hardship and thus would be eligible. However, one could say that a student with, for example, a physical disability or a problem with access or who needed extra heating or whatever, might very well be deemed by the local authority to come within this qualification. I am concerned by the fact that the resource was put in place through recognition by government that hardship could be created because of the operation of the single room rent, yet local authorities have not availed themselves of it while we consider our way forward on the responses to the housing Green Paper.

The Earl of Listowel: Before the noble Baroness sits down, perhaps I may ask her to clarify one further point arising from what she has just said. What about young women who are pregnant and approaching the birth of their child who wish to move into more appropriate accommodation which they might be able to afford once the baby is born? If they wish to move into that accommodation three months or so before they are entitled to, because it is more than a single room rent will they be able to do so under this arrangement?

Baroness Hollis of Heigham: By my definition, they would certainly be eligible for payments from the exceptional hardship scheme if the local authority so devised. I am not sure whether they would qualify as an exempt group. I stand to be corrected on that, but I believe that at the moment they do not qualify as an exempt group as do care leavers. However, in my view, the type of situation that the noble Earl described would merit serious consideration by a local authority for an exceptional hardship scheme.

Earl Russell: I thank the Minister very warmly for that reply and for being, I believe, as helpful as she possibly could be. Again, I express my gratitude for what was done for those aged over 25 with regard to the single room rent. I am sure that the Minister remembers, as I do, a good many private conversations on that subject. I shall not repeat them.
	I am also grateful to her for again publicising the existence of the hardship money. That is important and it needs to be repeated. However, granted that there is no apparent logic in what she describes, it is easier to be logical in the allocation of an adequate budget than in the allocation of an inadequate budget. Many local authorities believe themselves to have an inadequate budget. In handling an inadequate budget, one must select priorities in a way that will always be illogical. Therefore, possibly if the Government were able to give a slightly more generous interpretation than they have yet done to the phrase "crude and universal capping", as used in their manifesto, we might see a little more progress on this matter.
	I thank the right reverend Prelate and the noble Earl, Lord Listowel, for raising the issues of care leavers and pregnant women, both of which I should have liked to raise myself but I felt that I had trespassed on the patience of the Committee long enough. These two issues can easily be, as it were, chipped off the monolith of the single room rent and altered even if the policy were to be unchanged. Were that--I hope not--to be the case, I hope that those two bits might be chipped off it.
	I am not altogether convinced by what the Minister said with regard to people in work having worse accommodation than those on housing benefit. After all, a great many people in work are now on housing benefit. In the London Borough of Kingston a new police constable receives housing benefit. I believe that by raising questions such as those, the Minister simply draws attention, first, to the level of wages, which is outside our purview tonight, and, secondly, to the more general problems of the housing market. Those are questions which I think all of us in all parties need to think about a good deal more fundamentally than we yet have done.
	Obviously we are not going to solve the problems of housing by fundamentally non-market solutions. Equally obviously, we are not going to solve them by pure market solutions in a market working as it is. Every taxation provision, every legislation provision, all of these are things that influence the market. We should wonder whether the market is actually balanced correctly as it is at the moment because it certainly is not delivering any very substantial supply of rented accommodation at the lower end of the market while, at the same time, we have a flood of money going into the upper end of the housing market, especially in the London area, which is creating a very considerable distortion and absorbing capital which might be more productively invested elsewhere.
	This again is not a question which I think the Committee would wish me to pursue at this time of night. I merely give notice that I think all of us, including myself, need to go away and think about it. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clauses 71 and 72 agreed to.
	[Amendment No. 186 not moved.]
	Clause 73 [Contributions in respect of benefits in kind: Great Britain]:

Lord Higgins: moved Amendment No. 187:
	Page 74, line 36, at end insert--
	("( ) Nothing in this section shall apply to any childcare provision by the employer, which shall be exempt from Class 1A contributions.").

Lord Higgins: My Lords, the clause which this amendment seeks to alter is one which has obvious implications as far as the Budget is concerned and raises our usual dispute as to whether a particular measure should be implemented by the Department of Social Security or the Treasury. It also raises the question whether everything which is taxable ought to be NICable. The Government are somewhat in disarray as far as that is concerned.
	Amendment No. 187 actually seeks to do something which the Chancellor of the Exchequer said he was going to do in the Budget: to encourage employers to help employees with child care, all provision in kind will remain exempt from employer class 1A national insurance contributions when these are extended to other employee benefits from April 2000. This matter was raised on the same amendment in another place and, despite the fact that it did what the Government said in their Budget they were going to do, the Government went through the Lobbies to vote it down. My understanding is that they are now proposing to do this by regulation, which does seem a rather strange series of events.
	In all events, the noble Baroness, with her customary courtesy, sent me, I presume in draft, the various regulations relating to some of these matters. I am minded of the comment by the noble Baroness, Lady Castle, either at our last meeting on this Bill or the one before, where her secretary read out the totally incomprehensible piece of legislation and Lady Castle replied, "Read out the explanatory notes" and her secretary replied, "That is the explanatory note". The explanatory note to these draft regulations which the noble Baroness has sent me runs to three closely typed pages. Even so, I have to say that, as an explanatory note, it is not a great help. For example, the explanatory note says at one point that regulation 8 substitutes regulation 47 of the principle regulations (direct payment of class 1A contributions). As an explanatory note, I defy anyone to understand what on earth that means and, if we are going to have explanatory notes--and they can sometimes be very useful--simply referring to other legislation without actually saying what the principle legislation does is such-and-such and this does something else is really not very helpful.
	None the less, I am grateful to the noble Baroness for this and no doubt she will tell us that they are now prepared to accept the amendment which we have in front of us this evening, at any rate in principle.
	The other aspect which, even at this time of night, is worth raising is that Amendment No. 188 states:
	"Nothing in this section shall apply to any healthcare provision by the employer, which shall be exempt from Class 1A contributions".
	We are saying, as regards whether something taxable must be NIC-able, that if it is not so in the case of childcare it should not be so in the case of healthcare.
	In replying to this matter in Committee in another place, the Minister, Mr Rooker, said that of that £225 million which this stealth tax will raise--and he seems to think that a stealth tax is something which people dealing with this kind of legislation understand, rather than that the public at large do not understand--£17 million which is raised as a result of not exempting healthcare provision by an employer will go to the National Health Service.
	In answer to an intervention by Mr Pickles, who asked whether that is extra money, Mr Rooker replied that of course it is extra; it is £17 million new income. It is true that it is £17 million new income but I have looked in vain to discover where that national health provision has been increased by £17 million. I do not believe that it has but no doubt if I am wrong the noble Baroness will tell me where that extra £17 million for the National Health Service, which is to result from the Government coming into that money by not exempting healthcare provisions from NICs, is going to turn up. I do not believe that it does and I look forward to hearing from the noble Baroness where it is to be found. I beg to move.

Lord Goodhart: On these Benches, we start from the proposition that the tax base for NICs should be the same as the tax base for Schedule E income tax. If that is not the case, as past history has shown, there is a real chance of tax avoidance through the use of devices some of which, like payment in gold bars, are completely absurd and indefensible. Some, like the use of company cars, may originally have had some justification but have reached the level at which they distorted the economy and basically, people were being forced to take company cars whether they needed them or not simply because it was a more tax-efficient way of paying income.
	Therefore, in any case the test must be that there should be a presumption against exempting from NICs anything which is taxable for Schedule E.
	Against those tests, Amendment No. 187 has some justification. It is extremely difficult to see any justification for Amendment No. 188. The special position as regards childcare has already been recognised to some extent by virtue of the fact that in-house childcare facilities provided by an employer for employees are not taxable. The value of the childcare provided is not taxable under Schedule E and, therefore, it would be logically indefensible to make that subject to NICs.
	Of course, a great deal of childcare is provided outside the employer's property and much of it in a way where the cost of it must come out of taxed income. Nevertheless, childcare is in a special position because, of course, it is impossible for many people, particularly women with children, to take employment at all unless childcare has been provided. That has been recognised by the extremely generous childcare allowances which are provided in the working families' tax credit. Therefore, I understand entirely, and indeed would support, the principle behind Amendment No. 187.
	Amendment No. 188 seems to be in a different position. After all, there is such a thing as the National Health Service. Many businesses provide payment of subscription to private health providers as part of the employment package. There is nothing wrong with that and in many cases it is in the interests of the business to do so because it ensures that key employees are able to get treatment at times most suitable to the employer.
	I speak as the father of a son who recently suffered a serious knee injury playing football. Luckily the cost of his treatment was met through the private health insurance taken out by his employer. He was able to get immediate treatment at a time that suited both him and his employer.
	Nevertheless, it seems that if that is part of the employment package provided by an employer for the employee, it is difficult to see why the employer should not be required to pay Class 1A contributions, given that it is recognised by the Government that it would not be sensible to take the further step of going the whole hog and making these subject fully to Class 1 contributions. Therefore, while we support Amendment No. 187, we are unable to support Amendment No. 188.

Baroness Hollis of Heigham: That was such a comprehensive speech and as I believe that I agree with every word of the noble Lord, Lord Goodhart, I almost wonder whether I need to reply to him. Perhaps I had better not just say, "Ditto, ditto".

Lord Higgins: In that context, what view does the noble Baroness hold about a company providing flu injections, given the crisis in the health service last year?

Baroness Hollis of Heigham: I do not have a view on that at the moment. I am sure that when I contemplate it, I shall have a view and I shall then be delighted to share it with the noble Lord, Lord Higgins.
	Clause 73 is a further step towards the alignment of tax and national insurance contributions (NICs). The clause provides for the extension of Class 1A NICs--the shorthand commonly used for national insurance contributions--to cover, from April 2000, benefits in kind such as private health insurance, beneficial loans or use of a company yacht. It means that in future employers will pay NICs on all benefits in kind that they provide which are subject to income tax. The Class 1A NICs charge will be based on the taxable value of the benefit in kind, so that there is parity of treatment between cash and non-cash earnings.
	That change, announced by the Chancellor in his 1999 Budget, was recommended by Martin Taylor in his report The Modernisation of Britain's Tax and Benefit System. As we have heard, the Opposition's amendments aim to remove two types of benefits from liability to Class 1A NICs: childcare benefit and the provision of private medical insurance.
	First, I shall deal with Amendment No. 187 where there is little difference in the Committee in terms of the desired outcome. This March, in the Budget, the Chancellor announced one exception to the simple rule that what is taxable is also NIC-able. He said that, to encourage employers to provide childcare to help their employees, Class 1A NICs will not be charged on the value of any in kind childcare arranged by the employer. That will, of course, be welcomed by employees. It will not involve the employer in any greater effort than recording the value of the provided childcare in a different box on the P11D form with which they are familiar.
	That has been done to encourage employers to help employees with children by providing more childcare facilities. Having been heavily involved in the WFTC Bill, it is quite clear that apart from getting an immediate family relative to care for a child, the childcare most favoured by people moving into the labour market is workplace nurseries, or employer-funded childcare of the sort that is congruent with the person's working hours.
	Employers who organise places in commercial nurseries, arrange for a childminder, provide a workplace nursery or provide childcare vouchers will not pay Class 1A NICs. As the noble Lord, Lord Goodhart, said, that precisely fits the working families' tax credit scheme.
	In spirit, therefore, Amendment No. 187 is the same as the Chancellor's announcement. We appear to differ only on the best way to deliver the necessary legislation. We believe it is preferable to set out the definition of childcare in regulations so that everyone is clear what is and what is not covered.
	The noble Lord, Lord Higgins, knows well that it is traditional in relation to the NICs scheme for the primary legislation to be rather wide, but encompassing regulation-making powers. The details are properly set out in regulations. The Delegated Powers and Deregulation Committee recognised that in relation to the provisions in this Bill. The detail can then be amended if need be without unnecessarily taking up parliamentary time as to the type of childcare and so forth. Amendment No. 187 is therefore unnecessary. If we have not already done so, we will send a copy of the regulations to Members of the Committee indicating to what they apply.
	However, like the noble Lord, Lord Goodhart, the same argument does not apply to Amendment No. 188. At the core, childcare removes a barrier to work; private healthcare is part of the remuneration for work. That is the distinction the Government draw. I am sure it is one that the noble Lord, Lord Higgins, understands. Excluding private healthcare from Class 1A would undermine one of the main purposes of introducing Class 1A NICs; that is, to bring closer together the NICs' treatment of cash and non-cash earnings. The speech made by the noble Lord, Lord Goodhart, both tonight and at Second Reading, was exactly right when he said treating some form of perks as NIC-free distorts the system of wages and salaries. The extension of Class 1A will reduce that distortion.
	I also agree strongly with the view expressed by the noble Lord, Lord Goodhart, that there is a significant difference between the two amendments. As I say, childcare is provided to remove obstacles; to help employees with children cope with work and family responsibilities, whereas private healthcare is regarded as part of the remuneration.

Lord Higgins: I wonder if I may pursue a point to which the noble Baroness did not give an answer earlier. Does she think that flu injections given by a company ought to be chargeable to NICs on that company, given the clear beneficial effect and reduction in the cost to the National Health Service which would have resulted had flu been more widespread last winter? Would it not be a good idea to encourage that and not to penalise it in the future?

Baroness Hollis of Heigham: I hope to receive some advice which I can share with the noble Lord in a moment or two. It is only large firms that can afford to offer their employees many and various benefits in kind. Rather than subsidise those large firms at the expense of small firms and their employees by minimising NICs they pay on benefits they provide, we prefer the level playing field approach and at the same time putting more money into the NHS where it is most needed.
	Members of the Committee may not be aware that NICs are equal to 0.9 per cent of the value of all benefits subject to Class 1A NICs, and that percentage will go towards funding the NHS. In other words, in response to an earlier question raised by the noble Lord, Lord Higgins, that £17 million extra is the statutory percentage of each NICs class passed to the NHS. So it is not a question as to how the NHS is going to spend it; it is simply part of the tithing of the NICs percentage that goes direct to the NHS.

Lord Higgins: It may be more convenient for me to interrupt the noble Baroness. Where does that extra £17 million appear in the Government's provision for the National Health Service? The crucial question is whether the £17 million is extra for the National Health Service. Where does it appear in the government accounts that we are going to spend an extra £17 million on the National Health Service? Does the noble Lord wish to intervene?

Lord McIntosh of Haringey: I merely wish to say that that is a different Bill. We will deal with the Government resource Bill in due course.

Lord Higgins: With respect to the noble Lord, it is not a different Bill. The matter came up at Committee stage in another place and we were assured that it was an extra £17 million. I was simply saying, as I said earlier, that I do not believe that that is so.

Baroness Hollis of Heigham: As I understand it, and if I am wrong of course I shall write to the noble Lord, whenever the NICs scheme is altered and more revenue is raised as a result of these measures, a statutory percentage of that 0.9 per cent passes to the NHS, neither more nor less; that represents £17 million in this case and therefore that goes across. That is my understanding of the situation but, if I have misled the noble Lord, I shall of course write to him.
	The noble Lord also asked whether flu jabs were taxable and therefore NIC-able. They are indeed taxable, and therefore NIC-able. Such small amounts, however, are usually wrapped up by the firm in a PAYE settlement agreement, which is therefore to the mutual convenience of all concerned.
	The costs have been detailed in the regulatory impact assessment; it falls only on employers; it is about the alignment of taxes and NICs, the alignment of cash and non-cash benefits, and greater fairness between big and small firms, with no obvious financial gain to the Treasury. I hope that, for all of those reasons, and above all because one should not be distorting the system by seeking to evade proper NICs and taxable payments by going through the benefits-in-kind route, the noble Lord will withdraw his amendment.

Lord Higgins: As the Government propose to implement what my amendment does by way of a statutory instrument, then of course I am prepared to withdraw it. I have sympathy for those members of the Labour Party who were forced to go through the division lobbies to the contrary effect only a short time ago.
	As far as the second amendment is concerned, I look forward to seeing what information the noble Baroness manages to ascertain with regard to the question of the National Health Service.

Amendment, by leave, withdrawn.
	[Amendments Nos. 188 to 191 not moved.]

Lord Higgins: moved Amendment No. 192:
	Page 76, line 26, leave out ("with 6th April 2000") and insert ("on 6th April of the year after the date of commencement of this Act, or, if this Act comes into force on various dates, the earliest of those dates,").

Lord Higgins: This is the final amendment we are debating this evening. It refers to the question of timing.
	Effectively, it seeks to amend the clause on page 76 of the Bill which suggests that all these changes in National Insurance contributions shall come into effect with effect from 6th April 2000. In other words, it is a piece of retrospective legislation.
	I am not sure to what extent anyone was informed in advance that this was going to be the case. It would seem more reasonable, however, not to backdate it and make it retrospective but to ensure that it happens next April rather than at the present time, and indeed for some weeks past. I beg to move.

Baroness Hollis of Heigham: The clause fulfils the 1999 Budget commitment to introduce an employer's NICs charge on all taxable benefits in kind from 6th April 2000. As Royal Assent to the Bill will be after that date, introduction of the charge will be backdated to 6th April. These amendments would prevent that from happening. It would be necessary to postpone the implementation of the extended Class 1A NICs scheme for a year.
	Benefits provided from 6th April this year will attract a Class 1A NICs charge, which will be due to be paid to the Revenue by 19 July 2001. We do not believe that this will cause problems for employers. They were all sent the guidance booklet, enabling preparation for the change to be made.
	To delay implementation now would mean that all the preparatory work already done by employers would be wasted and there would be confusion over the date the provisions take effect. Many of the details of the Class 1A charge, particularly the emoluments exempted from liability, will be in regulations, so they must also become operative from the beginning of the tax year.
	Is that enough for the noble Lord? I can continue with the answer but, given that employers are expecting to operate this scheme, we see no virtue in changing the dates.

Lord Higgins: I have one simple question. Is it the case that they may already have prepared or indeed submitted their payroll returns and will now have to alter them?

Baroness Hollis of Heigham: I am assured that that is not the case.

Amendment, by leave, withdrawn.
	[Amendment No. 193 not moved.]
	Clause 73 agreed to.
	Clauses 74 and 75 agreed to.

Baroness Hollis of Heigham: moved Amendment No. 193A:
	After Clause 75, insert the following new clause--
	:TITLE3:LIABILITY OF EARNER FOR SECONDARY CONTRIBUTIONS: GREAT BRITAIN
	"( .--(1) In paragraph 3 of Schedule 1 to the Social Security Contributions and Benefits Act 1992 (prohibition on deduction or recovery of Class 1 contributions), sub-paragraph (2) shall be omitted.
	(2) After that paragraph there shall be inserted--
	"Prohibition on recovery of employer's contributions
	3A.--(1) Subject to sub-paragraph (2) below, a person who is or has been liable to pay any secondary Class 1 or any Class 1A or Class 1B contributions shall not--
	(a) make, from earnings paid by him, any deduction in respect of any such contributions for which he or any other person is or has been liable;
	(b) otherwise recover any such contributions (directly or indirectly) from any person who is or has been a relevant earner; or
	(c) enter into any agreement with any person for the making of any such deduction or otherwise for the purpose of so recovering any such contributions.
	(2) Sub-paragraph (1) above does not apply to the extent that an agreement between--
	(a) a secondary contributor, and
	(b) any person ('the earner') in relation to whom the secondary contributor is, was or will be such a contributor in respect of the contributions to which the agreement relates,
	allows the secondary contributor to recover (whether by deduction or otherwise) the whole or any part of any secondary Class 1 contribution payable in respect of a gain that is treated as remuneration derived from that earner's employment by virtue of section 4(4)(a) above.
	(3) Sub-paragraph (2) above does not authorise any recovery (whether by deduction or otherwise)--
	(a) in pursuance of any agreement entered into before 19th May 2000; or
	(b) in respect of any liability to a contribution arising before the day of the passing of the Child Support, Pensions and Social Security Act 2000.
	(4) In this paragraph--
	'agreement' includes any arrangement or understanding (whether or not legally enforceable); and
	'relevant earner', in relation to a person who is or has been liable to pay any contributions, means an earner in respect of whom he is or has been so liable.
	Transfer of liability to be borne by earner
	3B.--(1) This paragraph applies where--
	(a) an election is jointly made by--
	(i) a secondary contributor, and
	(ii) a person ('the earner') in relation to whom the secondary contributor is or will be such a contributor in respect of contributions on share option gains by the earner,
	for the whole or a part of any liability of the secondary contributor to contributions on any such gains to be transferred to the earner; and
	(b) the election is one in respect of which the Inland Revenue have, before it was made, given by notice to the secondary contributor their approval to both--
	(i) the form of the election; and
	(ii) the arrangements made in relation to the proposed election for securing that liability transferred by the election will be met.
	(2) Any liability which--
	(a) arises while the election is in force, and
	(b) is a liability to pay the contributions on share option gains by the earner, or the part of them, to which the election relates,
	shall be treated for the purposes of this Act, the Administration Act and Part II of the Social Security Contributions (Transfer of Functions, etc.) Act 1999 as a liability falling on the earner, instead of on the secondary contributor.
	(3) Subject to sub-paragraph (7)(b) below, an election made for the purposes of sub-paragraph (1) above shall continue in force from the time when it is made until whichever of the following first occurs, namely--
	(a) it ceases to have effect in accordance with its terms;
	(b) it is revoked jointly by both parties to the election;
	(c) notice is given to the earner by the secondary contributor terminating the effect of the election.
	(4) An approval given to the secondary contributor for the purposes of sub-paragraph (1)(b) above may be given either--
	(a) for an election to be made by the secondary contributor and a particular person; or
	(b) for all elections to be made, or to be made in particular circumstances, by the secondary contributor and particular persons or by the secondary contributor and persons of a particular description.
	(5) The grounds on which the Inland Revenue shall be entitled to refuse an approval for the purposes of sub-paragraph (1)(b) above shall include each of the following--
	(a) that it appears to the Inland Revenue that adequate arrangements have not been made for securing that the liabilities transferred by the proposed election or elections will be met by the person or persons to whom it would be so transferred; and
	(b) that it appears to the Inland Revenue that they do not have sufficient information to determine whether or not grounds falling within paragraph (a) above exist.
	(6) If, at any time after they have given an approval for the purposes of sub-paragraph (1)(b) above, it appears to the Inland Revenue--
	(a) that the arrangements that were made or are in force for securing that liabilities transferred by elections to which the approval relates are met are proving inadequate or unsatisfactory in any respect, or
	(b) that any election to which the approval relates has resulted, or is likely to result, in the avoidance or non-payment of the whole or any part of any secondary Class 1 contributions,
	the Inland Revenue may withdraw the approval by notice to the secondary contributor.
	(7) The withdrawal by the Inland Revenue of any approval given for the purposes of sub-paragraph (1)(b) above--
	(a) may be either general or confined to a particular election or to particular elections; and
	(b) shall have the effect that the election to which the withdrawal relates has no effect on contributions on share option gains in respect of any right to acquire shares obtained after--
	(i) the date on which notice of the withdrawal of the approval is given, or
	(ii) such later date as the Inland revenue may specify in that notice.
	(8) Where the Inland Revenue have refused or withdrawn their approval for the purposes of sub-paragraph (1)(b) above, the person who applied for it or, as the case may be, to whom it was given may appeal to the Special Commissioners against the Inland Revenue's decision.
	(9) On an appeal under sub-paragraph (8) above the Special Commissioners may--
	(a) dismiss the appeal;
	(b) remit the decision appealed against to the Inland Revenue with a direction to make such decision as the Special Commissioners think fit; or
	(c) in the case of a decision to withdraw an approval, quash that decision and direct that that decision is to be treated as never having been made.
	(10) Subject to sub-paragraph (12) below, an election under sub-paragraph (1) above shall not apply to any contributions in respect of gains realised before it was made.
	(11) Regulations made by the Inland Revenue may make provision with respect to the making of elections for the purposes of this paragraph and the giving of approvals for the purposes of sub-paragraph (1)(b) above; and any such regulations may, in particular--
	(a) prescribe the matters that must be contained in such an election;
	(b) provide for the manner in which such an election is to be capable of being made and of being confined to particular liabilities or the part of particular liabilities; and
	(c) provide for the making of applications for such approvals and for the manner in which those applications are to be dealt with.
	(12) Where--
	(a) an election is made under this paragraph before the end of the period of three months beginning with the date of the passing of the Child Support, Pensions and Social Security Act 2000, and
	(b) that election is expressed to relate to liabilities for contributions arising on or after 19th May 2000 and before the making of the election,
	this paragraph shall have effect in relation to those liabilities as if sub-paragraph (2) above provided for them to be deemed to have fallen on the earner (instead of on the secondary contributor); and the secondary contributor shall accordingly be entitled to reimbursement from the earner for any payment made by that contributor in or towards the discharge of any of those liabilities.
	(13) In this paragraph references to contributions on share option gains by the earner are references to any secondary Class 1 contributions payable in respect of a gain that is treated as remuneration derived from the earner's employment by virtue of section 4(4)(a) above.
	(14) In this paragraph 'the Special Commissioners' means the Commissioners for the special purposes of the Income Tax Acts."
	(3) In section 6(4) of that Act (persons by whom Class 1 contributions are payable), for the words from "paragraph 3" onwards there shall be substituted "paragraphs 3 to 3B of Schedule 1 to this Act."
	(4) In paragraph 8(1) of Schedule 1 to that Act (general regulations), after paragraph (c) there shall be inserted--
	"(ca) for requiring a secondary contributor to notify a person to whom any of his liabilities are transferred by an election under paragraph 3B above of--
	(i) any transferred liability that arises;
	(ii) the amount of any transferred liability that arises; and
	(iii) the contents of any notice of withdrawal by the Inland Revenue of any approval that relates to that election;".
	(5) In section 8(1) of the Social Security Contributions (Transfer of Functions, etc.) Act 1999 (decisions to be taken by officers of the Inland Revenue), after paragraph (i) there shall be inserted--
	"(ia) to decide whether to give or withdraw an approval for the purposes of paragraph 3B(1)(b) of Schedule 1 to the Social Security Contributions and Benefits Act 1992;".
	(6) In section 10 of that Act of 1999 (regulations about varying or superseding decisions), at the beginning of subsection (1) there shall be inserted "Subject to subsection (2A) below,", and after subsection (2) there shall be inserted--
	"(2A) The decisions in relation to which provision may be made by regulations under this section shall not include decisions falling within section 8(1)(ia) above."
	(7) In section 12(4) of that Act of 1999 (appeals to be heard by General Commissioners), after "Subject to" there shall be inserted "paragraph 3B(8) of Schedule 1 to the Social Security Contributions and Benefits Act 1992 (which provides for appeals under that paragraph to be heard by the Special Commissioners), to".").

Baroness Hollis of Heigham: I would like to move Amendment No. 193A and speak also to Amendment Nos. 198ZA, 200A, 200B and 202A.
	I deeply regret and would like to apologise to the House for the lateness of tabling this amendment. As a Government, we have tried not only to reduce the total number of amendments tabled but, where they have been tabled, to do so well in advance or at all stages of Committee, so I very much regret that it should be at such late notice.
	Noble Lords may be aware that, following the Chancellor's Budget statement, the Financial Secretary has been engaged in a period of consultation with employers to provide a technical solution to a problem that has arisen in relation to National Insurance contributions on share option gains--

Lord Higgins: I am sorry to interrupt the Minister, but could she just repeat the numbers in this grouping? She very courteously sent me a note on this group of amendments, but I understood that she was going to move amendments on Report.

Baroness Hollis of Heigham: No. I am moving Amendment No. 193A and speaking to Amendments Nos. 198ZA, 200A, 200B and 203. The Government have given an undertaking as far as they can not to introduce new material on Report which, therefore, is not available for full discussion. That is why I consulted noble Lords as much as I could over the weekend. I contacted the noble Lords, Lord Astor and Lord Goodhart, and said that I was very sorry that we were tabling such amendments late. I apologised for that fact but I thought that, on balance--and bearing in mind that these measures are welcomed by industry--it was more helpful to noble Lords to table them for tonight to enable discussion to take place, rather than leave them to the Report stage.
	Obviously, I tried to reach the noble Lord, Lord Higgins, over the weekend. I am sure it was my fault that I was unable to do so. However, perhaps I may suggest to him that he allows me to move and to speak to those amendments. I hope that the noble Lord will not be unhappy about any aspects of them but, if he is, I shall be more than happy to set up a meeting with officials to enable him and the noble Lord, Lord Goodhart, to discuss the implications of the amendments in greater detail. Thereafter, if the noble Lord, Lord Higgins, wishes to return to the matter by tabling clarifying amendments, so to speak, on Report, he will be entitled to do so. Can I suggest that to the noble Lord as the possible way forward?

Lord Higgins: I do not want to delay the Committee at this late hour and I am happy to ensure that legislation is dealt with appropriately. The very courteous message that I received from the noble Baroness provided me with information on these clauses, but my clear understanding was that they would be moved on Report. I was a little surprised by what has just happened. As of this morning, the grouping information that I received did not appear to include these clauses. It was obviously remiss of me. I should have realised that they had subsequently been tabled. But I am not sure when they were tabled.
	As I say, I do not want to make a great fuss about this. It is simply that we were rather taken by surprise because the Minister is not doing what we understood she said she was going to do.

Baroness Hollis of Heigham: In the letter that I faxed through to the noble Lords, Lord Astor and Lord Goodhart, I asked whether they wished to see the amendments at that time, and said:
	"I very much regret that these amendments were tabled at such short notice, but I thought that this was preferable to delaying tabling the amendments until Report".
	I wonder whether--

Lord Astor of Hever: There may have been a breakdown in communication here. I had understood that the amendments would be tabled but that the debate would take place on Report. I also understood that the Minister would provide officials to brief us between now and that time, with the general debate taking place at Report stage. That was the tenor of our discussion on the telephone.

Baroness Hollis of Heigham: If I was going to table them on Report, they would not normally have been tabled at this stage. Indeed, I would not have been running around during the weekend telling noble Lords that I was tabling these amendments. I did so because we were doing precisely what we had sought not to do; namely, tabling amendments at quite short notice. I was very anxious that noble Lords should have the benefit of that information. I certainly sent the identical letter to both the noble Lord, Lord Astor, and the noble Lord, Lord Goodhart. Obviously, I tried to reach the noble Lord, Lord Higgins, but through no error on either side--he was perfectly entitled to be away--I was unable to reach him. I give way.

Lord Goodhart: I am grateful to the Minister. From my point of view, although I had not thought about this in very great detail, I should say that my assumption was that if these amendments were to be tabled today, they would, in accordance with normal practice, also be moved today. That was my assumption.

Baroness Hollis of Heigham: As I say, it is the Government's fault, so to speak, that these amendments are tabled so late. I do not like that situation. However, I hope that the noble Lord will allow me to explain the amendments. As I say, I am happy to offer the noble Lord a meeting with officials to discuss matters. He may return to the matter at Report stage with amendments either to clarify or to seek to amend the Government's proposals.
	I say in my defence that employers are pressing us on this matter. I believe that the measure is broadly regarded as entirely benign. Therefore I hope that the Committee will allow me to cut corners, so to speak, on introducing it tonight.

Lord Higgins: I am perfectly content for the noble Baroness to proceed as she has suggested. If she wishes to proceed with her explanation now, that is fine. We shall then consider the matter further at Report stage.

Baroness Hollis of Heigham: I am grateful to the noble Lord for those comments. At least I can now "bank", so to speak, the sketch of what we propose to do.
	Since 6th April 1999, gains made by employees when they exercise share options granted after 5th April 1999 are subject to Class 1 NICs, unless the share options are awarded and exercised under an Inland Revenue approved scheme or the shares acquired are not readily convertible into cash.
	The Committee may be aware that under accountancy rules companies are required to make a provision in their accounts for the anticipated NICs liability on share options based on the market price of the shares on the date that they prepare the accounts.
	Many companies have informed us that while they can plan for NICs on regular pay, it is more difficult for them to plan for NICs on share option gains, particularly where the share price is volatile, as it is in the high growth sector of the economy, such as the new Internet companies. The exposure to so unpredictable a NICs liability could put at risk these companies' investment strategies and even make some companies technically insolvent. The unpredictability of accounting provisions is a severe worry to employers. As a result, a number of these companies are now questioning their investment plans for the UK and have told us that they might consider moving jobs elsewhere.
	Class 1 NICs consist of a primary contribution, which is payable by the employee and a secondary contribution which is payable by the secondary contributor, which, in most circumstances, is the employer. Current social security legislation provides a statutory bar to prevent employers from recovering any part of their secondary Class 1 liability from the employee. This amendment strengthens that protection for the employee but at the same time introduces an exception for NICs arising on share option gains.
	The amendment does three things. First, it allows employers and employees to reach an agreement that a secondary contributor (usually the employer) may recover some or all of the secondary NICs in respect of rights to acquire shares from the employee. Secondly, and as an alternative, the employer may make an application for approval of an election to the Board of the Inland Revenue. If approval is obtained, the employer and employee can jointly elect to transfer all or some of the liability to pay the secondary NICs on the share option gain to the employee. Elections can be made only after the Inland Revenue has given its approval to the form of the election and the accompanying arrangements for securing that the NICs liability transferred to the employee is paid.
	We shall introduce the ability to transfer the liability to the employee to overcome accounting difficulties for companies that report in the United States which would otherwise arise if the employer simply recovered the NICs. This flexibility has been provided in response to requests made to us during the consultation period.
	Thirdly, the proposed amendment strengthens the existing statutory bar that prevents the employer recovering any part of the secondary NIC in respect of all forms of earnings (subject to the new exception for share options). It extends protection to the employee by ensuring that the person liable to pay the Class 1A NICs (on benefits in kind) or Class 1B (on pay-as-you-earn settlement agreements) cannot recover his liability from the employee.
	I emphasise that this amendment seeks to put in place a solution that a number of companies have requested and we are meeting those requests. I should also add that the Government have consulted widely on the solution and it is clear that many of the companies that we have spoken to will welcome it. I can assure the Committee that the employer may only transfer or recover his liability from the employee if the employee so agrees.
	The merits of the solution are such that it completely eliminates the unpredictability of the charge to the company and it moves the liability to the person with funds to pay for it. We believe that it is needed to attract business and jobs to the UK and to help UK companies compete in the global market. It goes towards meeting the Government's aim of a fairer national insurance system by ensuring that NICs are paid on share options and not treated more favourably than other kinds of remuneration.
	As I said, I am very happy to expand on that to Members of the Committee, either by letter or by meeting. Given that explanation, I hope that the Committee will accept this measure and these amendments. I beg to move.

Lord Higgins: It is helpful to have that on the record. No doubt we shall wish to consider the matter between now and Report stage. A number of thoughts immediately occur to one--for example, does the Revenue refund the money if the share option goes, in the jargon, under water? However, I leave that to another occasion. We appreciate what the Minister has said.

Lord Goodhart: Who are we to interfere in an agreement reached between the Government and employers? I can see the problem outlined by the Minister. I am prepared to give her the benefit of the doubt that this is the right way of dealing with it. The legislation is extremely complex and quite impossible to take on board in the time available to do so. No doubt if there are problems, we shall be briefed before Report stage by those who have an interest in making changes to the legislation.

On Question, amendment agreed to.
	Clause 76 [Contributions in respect of benefits in kind: Northern Ireland]:
	[Amendments Nos. 194 to 198 not moved.]
	Clause 76 agreed to.
	Clauses 77 and 78 agreed to.

Baroness Hollis of Heigham: moved Amendment No. 198ZA:
	Insert the following new clause--
	:TITLE3:LIABILITY OF EARNER FOR SECONDARY CONTRIBUTIONS: NORTHERN IRELAND
	(" .--(1) In paragraph 3 of Schedule 1 to the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (prohibition on deduction or recovery of Class 1 contributions), sub-paragraph (2) shall be omitted.
	(2) After that paragraph there shall be inserted--
	"Prohibition on recovery of employer's contributions
	3A.--(1) Subject to sub-paragraph (2) below, a person who is or has been liable to pay any secondary Class 1 or any Class 1A or Class 1B contributions shall not--
	(a) make, from earnings paid by him, any deduction in respect of any such contributions for which he or any other person is or has been liable;
	(b) otherwise recover any such contributions (directly or indirectly) from any person who is or has been a relevant earner; or
	(c) enter into any agreement with any person for the making of any such deduction or otherwise for the purpose of so recovering any such contributions.
	(2) Sub-paragraph (1) above does not apply to the extent that an agreement between--
	(a) a secondary contributor, and
	(b) any person ('the earner') in relation to whom the secondary contributor is, was or will be such a contributor in respect of the contributions to which the agreement relates,
	allows the secondary contributor to recover (whether by deduction or otherwise) the whole or any part of any secondary Class 1 contribution payable in respect of a gain that is treated as remuneration derived from that earner's employment by virtue of section 4(4)(a) above.
	(3) Sub-paragraph (2) above does not authorise any recovery (whether by deduction or otherwise)--
	(a) in pursuance of any agreement entered into before 19th May 2000; or
	(b) in respect of any liability to a contribution arising before the day of the passing of the Child Support, Pensions and Social Security Act 2000.
	(4) In this paragraph--
	'agreement' includes any arrangement or understanding (whether or not legally enforceable); and
	'relevant earner', in relation to a person who is or has been liable to pay any contributions, means an earner in respect of whom he is or has been so liable.
	Transfer of liability to be borne by earner
	3B.--(1) This paragraph applies where--
	(a) an election is jointly made by--
	(i) a secondary contributor, and
	(ii) a person ('the earner') in relation to whom the secondary contributor is or will be such a contributor in respect of contributions on share option gains by the earner,
	for the whole or a part of any liability of the secondary contributor to contributions on any such gains to be transferred to the earner; and
	(b) the election is one in respect of which the Inland Revenue have, before it was made, given by notice to the secondary contributor their approval to both--
	(i) the form of the election; and
	(ii) the arrangements made in relation to the proposed election for securing that liability transferred by the election will be met.
	(2) Any liability which--
	(a) arises while the election is in force, and
	(b) is a liability to pay the contributions on share option gains by the earner, or the part of them, to which the election relates,
	shall be treated for the purposes of this Act, the Administration Act and Part III of the Social Security Contributions (Transfer of Functions, etc.) (Northern Ireland) Order 1999 as a liability falling on the earner, instead of on the secondary contributor.
	(3) Subject to sub-paragraph (7)(b) below, an election made for the purposes of sub-paragraph (1) above shall continue in force from the time when it is made until whichever of the following first occurs, namely--
	(a) it ceases to have effect in accordance with its terms;
	(b) it is revoked jointly by both parties to the election;
	(c) notice is given to the earner by the secondary contributor terminating the effect of the election.
	(4) An approval given to the secondary contributor for the purposes of sub-paragraph (1)(b) above may be given either--
	(a) for an election to be made by the secondary contributor and a particular person; or
	(b) for all elections to be made, or to be made in particular circumstances, by the secondary contributor and particular persons or by the secondary contributor and persons of a particular description.
	(5) The grounds on which the Inland Revenue shall be entitled to refuse an approval for the purposes of sub-paragraph (1)(b) above shall include each of the following--
	(a) that it appears to the Inland Revenue that adequate arrangements have not been made for securing that the liabilities transferred by the proposed election or elections will be met by the person or persons to whom it would be so transferred; and
	(b) that it appears to the Inland Revenue that they do not have sufficient information to determine whether or not grounds falling within paragraph (a) above exist.
	(6) If, at any time after they have given an approval for the purposes of sub-paragraph (1)(b) above, it appears to the Inland Revenue--
	(a) that the arrangements that were made or are in force for securing that liabilities transferred by elections to which the approval relates are met are proving inadequate or unsatisfactory in any respect, or
	(b) that any election to which the approval relates has resulted, or is likely to result, in the avoidance or non-payment of the whole or any part of any secondary Class 1 contributions,
	the Inland Revenue may withdraw the approval by notice to the secondary contributor.
	(7) The withdrawal by the Inland Revenue of any approval given for the purposes of sub-paragraph (1)(b) above--
	(a) may be either general or confined to a particular election or to particular elections; and
	(b) shall have the effect that the election to which the withdrawal relates has no effect on contributions on share option gains in respect of any right to acquire shares obtained after--
	(i) the date on which notice of the withdrawal of the approval is given, or
	(ii) such later date as the Inland revenue may specify in that notice.
	(8) Where the Inland Revenue have refused or withdrawn their approval for the purposes of sub-paragraph (1)(b) above, the person who applied for it or, as the case may be, to whom it was given may appeal to the Special Commissioners against the Inland Revenue's decision.
	(9) On an appeal under sub-paragraph (8) above the Special Commissioners may--
	(a) dismiss the appeal;
	(b) remit the decision appealed against to the Inland Revenue with a direction to make such decision as the Special Commissioners think fit; or
	(c) in the case of a decision to withdraw an approval, quash that decision and direct that that decision is to be treated as never having been made.
	(10) Subject to sub-paragraph (12) below, an election under sub-paragraph (1) above shall not apply to any contributions in respect of gains realised before it was made.
	(11) Regulations made by the Inland Revenue may make provision with respect to the making of elections for the purposes of this paragraph and the giving of approvals for the purposes of sub-paragraph (1)(b) above; and any such regulations may, in particular--
	(a) prescribe the matters that must be contained in such an election;
	(b) provide for the manner in which such an election is to be capable of being made and of being confined to particular liabilities or the part of particular liabilities; and
	(c) provide for the making of applications for such approvals and for the manner in which those applications are to be dealt with.
	(12) Where--
	(a) an election is made under this paragraph before the end of the period of three months beginning with the date of the passing of the Child Support, Pensions and Social Security Act 2000, and
	(b) that election is expressed to relate to liabilities for contributions arising on or after 19th May 2000 and before the making of the election,
	this paragraph shall have effect in relation to those liabilities as if sub-paragraph (2) above provided for them to be deemed to have fallen on the earner (instead of on the secondary contributor); and the secondary contributor shall accordingly be entitled to reimbursement from the earner for any payment made by that contributor in or towards the discharge of any of those liabilities.
	(13) In this paragraph references to contributions on share option gains by the earner are references to any secondary Class 1 contributions payable in respect of a gain that is treated as remuneration derived from the earner's employment by virtue of section 4(4)(a) above.
	(14) In this paragraph 'the Special Commissioners' means the Commissioners for the special purposes of the Income Tax Acts."
	(3) In section 6(4) of that Act (persons by whom Class 1 contributions are payable), for the words from "paragraph 3" onwards there shall be substituted "paragraphs 3 to 3B of Schedule 1 to this Act."
	(4) In paragraph 8(1) of Schedule 1 to that Act (general regulations), after paragraph (c) there shall be inserted--
	"(ca) for requiring a secondary contributor to notify a person to whom any of his liabilities are transferred by an election under paragraph 3B above of--
	(i) any transferred liability that arises;
	(ii) the amount of any transferred liability that arises; and
	(iii) the contents of any notice of withdrawal by the Inland Revenue of any approval that relates to that election;".
	(5) In Article 7(1) of the Social Security Contributions (Transfer of Functions, etc.) (Northern Ireland) Order 1999 (decisions to be taken by officers of the Inland Revenue), after sub-paragraph (i) there shall be inserted--
	"(ia) to decide whether to give or withdraw an approval for the purposes of paragraph 3B(1)(b) of Schedule 1 to the Contributions and Benefits Act;".
	(6) In Article 9 of that Order (regulations about varying or superseding decisions), at the beginning of paragraph (1) there shall be inserted "Subject to paragraph (2A) below,", and after paragraph (2) there shall be inserted--
	"(2A) The decisions in relation to which provision may be made by regulations under this Article shall not include decisions falling within Article 7(1)(ia) of this Order."
	(7) In Article 11(4) of that Order (appeals to be heard by General Commissioners), after "Subject to" there shall be inserted "paragraph 3B(8) of Schedule 1 to the Contributions and Benefits Act (which provides for appeals under that paragraph to be heard by the Special Commissioners), to".").
	On Question, amendment agreed to.
	Clauses 81 and 82 agreed to.
	Schedule 9 [Repeals and revocations]:
	[Amendment Nos. 198A and 199 not moved.]

Baroness Hollis of Heigham: moved Amendments Nos. 200 to 201:
	Page 140, line 41, column 3, after ("170(5),") insert ("in the definition of "the relevant enactments",").
	Page 147, line 8, column 3, at end insert--
	
		
			   ("In Schedule 1, paragraph 3(2).") 
		
	
	Page 147, line 28, column 3, at end insert--
	
		
			   ("In Schedule 1, paragraph 3(2).") 
		
	
	Page 148, line 30, at end insert--
	
		
			 ("1998 c. 14. The Social Security Act 1998. In Schedule 7, paragraph 32.") 
		
	
	On Question, amendments agreed to.
	Schedule 9, as amended, agreed to.
	Clause 83 [Commencement and transitional provisions]:
	[Amendment No. 202 not moved.]
	Clause 83 agreed to.
	Clause 84 [Short title and extent]:

Baroness Hollis of Heigham: moved Amendment No. 203:
	Page 88, line 14, leave out (" 78") and insert ("Liability of earner for secondary contributions: Northern Ireland").
	On Question, amendment agreed to.
	Clause 84, as amended, agreed to.
	House resumed: Bill reported with amendments.
	House adjourned at seven minutes past midnight.